Supply of labour — Edexcel A-Level Economics A
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Supply of labour explained
The supply of labour to a particular occupation is the number of workers willing and able to work in that occupation at each wage rate, over a given time period.
Read the full explanation
It is influenced by occupation-specific factors. A higher wage rate in the occupation raises the opportunity cost of not working there, attracting workers from other occupations and from inactivity, so the quantity supplied rises. Non-wage factors shift the whole supply curve: training requirements and qualifications, the cost and length of training, the occupation's status and working conditions, the availability of flexible or part-time hours, and the ease of entry and exit. For example, if a nursing qualification becomes cheaper and faster to obtain, more people can enter nursing at every wage rate, shifting supply right.
Your focus
- Define the supply of labour to a particular occupation.
- Explain how wage and non-wage factors influence the supply of labour to an occupation.
- Distinguish between a movement along and a shift of the labour supply curve for an occupation.
Supply of labour exam tips
Marking Points
- Define supply of labour to an occupation as the number of workers willing and able to work in that occupation at each wage rate, over a given time period.
- Explain that a higher wage rate in the occupation raises the opportunity cost of not working there, attracting workers from other occupations and from inactivity, so quantity supplied rises.
- Identify non-wage factors that shift the supply curve: training requirements and qualifications, cost and length of training, status and working conditions, availability of flexible or part-time hours, and ease of entry and exit.
- Use a concrete example: cheaper or faster nursing training increases the number able to enter nursing at every wage rate, shifting supply right.
- Distinguish a movement along the supply curve caused by a change in the occupation's wage rate from a shift caused by a change in another determinant.
- Recognise that government policy such as training subsidies or student funding changes, and demographic changes, can shift supply.
Examiner Tips
- 💡Read the MCQ carefully to identify whether the change is in the occupation's wage rate or in another determinant; this decides movement versus shift.
- 💡Eliminate options that describe demand-side changes when the question asks about supply of labour.
- 💡Use the phrase 'willing and able' when checking an option, because both willingness and ability must change for supply to shift.
Common Mistakes
- Confusing a movement along the labour supply curve with a shift of the curve. Correction: a change in the occupation's own wage rate causes a movement along the curve; a change in any other determinant shifts the curve.
- Treating the supply of labour as fixed or perfectly inelastic in all occupations. Correction: supply is usually upward-sloping and its elasticity varies with training time, qualifications and the availability of suitable workers.
- Assuming only pay matters. Correction: non-wage factors such as working conditions, status, flexibility and training costs also influence willingness and ability to work in an occupation.
- Thinking that an increase in demand for labour automatically increases supply. Correction: higher demand may raise the wage rate and cause a movement along the supply curve, but supply itself shifts only if a determinant of supply changes.