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Microeconomics of Labour Supply - Essay Example
In the study of labour economics the use of microeconomic principles for the analysis of macro-economic principles will allow a closer study of the role of individuals and individual firms in the labour market. Labour supply can be perceived in a way similar to other microeconomic problems in terms of their working hours, opportunity costs and their ability to trade their skills for work…
From a microeconomic perspective the labour market differs from other markets in terms of the factors of demand and supply mainly because there will be a limited supply of the resource i.e. "working hours",involved which may be further varied by many situations like epidemics,migration and increased vacations or even the wage rates currently being offered.The article discusses the correlation between employment and Labour demand and supply in the United Kingdom with the latest statistics and compares them to the employment rate in the 1970's.This has been attributed to the labour market performance which has increased since 1997
The national statistics (http://www.statistics.gov.uk/) have some good news for the British economy as they show that not only has employment increased but people are increasingly not claiming unemployment.This is because more jobs have been created and average earnings, excluding bonuses have increased (http://www.statistics.gov.uk/).
Now coming to the basic model of Microeconomic supply of labour,the labour supply curve in the microeconomic model is upward sloping because higher wages will attract more and more workers .This includes the labour supply emanating from the pool of labour supply which is working for other industries or the untapped sources of labour like housewives and the youn ...