The main factors which might determine the elasticity of supply of labour to an occupation such as computer specialist

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Last updated: April 19, 2019

The elasticity of supply of labour measures how a change in wage rate will affect the amount of labour supplied to a given market in this case computer specialists, it shows how flexible a labour market is to enter and exit. Both elastic and inelastic labour markets are shown below.

As you can see a inelastic labour market has a steeper supply of labour curve as it is not easy to enter the market usually due to the high skill levels needed and how long the investment in human capital will take before the economic agent can enter the market with the required skill, however an elastic labour market has a much less steep labour supply curve showing that the market is easier to enter and exit due to the lower levels of skill needed and is usually jobs such as waiting or shop assistants.An increase in wage rate in an inelastic labour market will have little effect on the amount of labour supplied however in the elastic market a small wage increase leads to a large increase in the quantity if labour supplied. Elastic Labour Supply Inelastic Labour Supply The main factor that affects the elasticity of supply in the computer specialists market is the amount of training and education needed in the market these cause large barriers to entry within the market.At the current time highly skilled IT Specialists need to go through intensive training often including 4 years of degree level studying this means that you cannot jus decide that as the wage rate increases in the market that you will become an it specialist however with today’s society the IT specialist markets barriers to entry are reducing due to amount of student being it literate and being “home taught” or taking shorter college based courses, however this still takes time which means the market is inelastic however it is becoming less inelastic as the population becomes more IT literate.The time taken to train in IT brings with it many opportunity costs and so can be very off putting to students, the average IT Specialist goes through compulsory education, a levels, a higher level degree and even sometimes courses after this, this means that in total it can take a student 6/7 years after compulasar7y education to become a IT specialist which means that a lot of people will prefer to enter the labour market and starting earning an income rather than spending the time investing in their human capital.

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This is true within all high skilled labour markets and so the more highly skilled the labour market is the more inelastic the supply of labour is. However if a person were to enter the labour market as a waiter being paid £5 an hour and then the shop assistant wage were to increase to £8 an hour the employee would be able to switch from being a waiter to becoming a shop assistant with very little problems at all due to the low barriers to entry of no skills being needed.Unemployment is another factor that affects the elasticity of a market, currently markets such as IT specialists have little unemployment both voluntary and frictionally, however other markets such as factory workers have high unemployment levels in the UK due to the factor of production of labour being replaced by capital which means that a lot of employees have been made redundant also the fact that the UK has high labour unit costs compared to countries such as Asia means that derived demand for workers in factories has reduced and so more people have become frictionally unemployed and looking for low skilled jobs making the lower skilled jobs even more elastic as these unskilled workers will not be able to move into markets such as specialised computing markets and so will move into lower skilled markets.The extent to which these factors affect the elasticity of demand for labour depends upon the government and its policies, the government are trying to combat inflexibility in the labour market by introducing schemes such as the new deal and training and educational councils which help low skilled workers become more highly skilled and reduce the inelasticity of certain labour markets, and as the main reason for inelastic labour markets is the skill level I believe that the market failure of unskilled workers will be best solved by the government policies of increased training and education be it Tec’s or even at the lower levels of new vocational training in secondary schools.

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