Factors Influencing the Supply of Labour
- There are numerous factors that influence the amount of labour supplied to a particular industry
- Different factors are present in different markets e.g. in the labour market for doctors, the length of time it takes to study to become a doctor limits the supply of doctors. However, in the nursing labour market, the low wages paid to nurses limit the amount of workers who offer their labour as nurses
- Different factors are present in different markets e.g. in the labour market for doctors, the length of time it takes to study to become a doctor limits the supply of doctors. However, in the nursing labour market, the low wages paid to nurses limit the amount of workers who offer their labour as nurses
Factors Influencing The Supply Of Labour
Training period | Wages in other occupations | Changes in migration policy |
Long training periods act as a barrier to entry & exclude many households from offering labour in certain markets |
Comparative wage rates in substitute labour markets strongly influence the supply of labour e.g. it is getting harder to recruit economics teachers as the private sector offers higher wages for their skills |
Policies that increase the net migration rate increase the supply of labour to certain industries e.g. Brexit revealed the extent of foreign labour in the hotel industry in the UK & the withdrawal created a shortage of workers |
Income tax levels | Working conditions | Trade union power |
At a certain level, income taxes become a disincentive to households offering their labour. The assumption is that as income tax increases, labour supply decreases - and vice versa |
The working conditions & non-pay benefits can act as strong incentive in certain industries e.g. tech companies are well known for their laid-back work environment & wide range of benefits e.g. on-site childcare & restaurants |
Trade unions can increase the supply of labour to certain industries as workers consider the benefits of belonging to the union e.g higher wages & a safer working environment |
Level of welfare benefits | Social trends | |
The higher the level of welfare benefits, the lower the incentive for low-skilled labour to offer their labour - and vice versa |
Social trends include any major changes within society & can influence the supply of labour to certain industries. Work from home during Covid resulted in significant changes to the labour market once economies opened up again e.g many restaurant workers did not feel safe returning to the jobs they previously had |