The Labor Market
In the labor market there exist forces of supply and demand of labor. The labor markets are where employers get labor while the employees get wages for jobs done. A demand labor curve displays the number of laborers who will give their services at the different wage rates. A supply demand curve on the other hand shows the number of workers a company is willing and able to pay at different wages. These two curves have an inverse relationship where the demand curve is downward sloping while the supply curve is vice versa. The demand curve is subject to the law of diminishing returns such that with the employment of extra workers the firm is receiving less output from each additional worker.
Certain factors affect the demand and supply labor curve such as the price of products, technological advancements and alternate sources of income (Alden, 2005). Where there is a boom in the economy the employers will demand for more labor so as to increase production and thus increase their profits. In some industries where there have been introduction of machines in the field there has been a reduction in the demand for human labor. In other industries the supply of labor has decreased due to increased wage level in other industries causing the workers to change jobs. The shifts in the curves are shown below (ss1, dd1).
In a market the point where the aggregate supply and demand curves meet is known as the equilibrium as per diagram below(equ). The employer is considering the marginal product revenue which is the extra revenue generated when the firm hires one more unit of labor. In an unrestricted market the demand and supply curves keep shifting as per the market forces and a new equilibrium is determined constantly by the markets. In a restricted market however the equilibrium point is not considered. The government may introduce the aspect of the minimum wage which is the least wage that can be paid to a laborer. This interferes with the market. As per diagram, the minimum wage(mw) is above the equilibrium causing a surplus of labor leading to unemployment. Workers are willing to work at the higher price however the employers are willing to only pay the high price for the skilled workers (Sparknotes Editors)
Labor force participation rate
This is the share of the population that is sixteen years and above which is employed or seeking employment. It is the participating measure of the country’s labor force. The determinants of the labor force participation rates are the level of wage rate. There is a level below which an individual will not work for. The other factor is level of education. Jobs with better benefits motivate higher participation from the educated people. The health rates of the country also influence the participation rate. A good health rate leads to high participation. The participation of women has increased due to changing social attitudes towards working women. There have also been reduced fertility rates in women. The participation rate in an industry is also affected by the level of labor mobility. This is the willingness of workers to shift jobs in the different industries (Philips, 2010)
Trends in labour force participation of older workers in Australia
There has been an increase in the participation of older workers in the industry after a decline for a long time (Kennedy, 2007) This is due to improved market conditions such as the wage rate for older workers. There have also been improvements in the health and education for the older workers. The increase can also be attributed to the aspect of the older population increasing their part-time participation.
The recent tax rebate introduced for older workers has also worked as incentive for older workers to continue working. Another factor could be that older women are choosing to continue to work. Their men will choose to continue working with them so that they retire together. There has also been drives by certain organizations encouraging the employers not to discriminate against older workers and instead to value them. This participation by older people will work towards increased prosperity of the nation.
Alden, L. (2005). Supply and demand in labor markets. Econoclass.com. (Online). Web.
Kennedy, S. & Alicia D. (2007) Older men bounce back: the re-emergence of older male workers (Online). Web.
Philips, P. (2010). Labour Market. The Canadian Encyclopedia (Online).Web.
Sparknotes Editors(n.d) Labor demand. Sparknotes (Online). Web.