Economics Year 13 revision Day 14 - Labour market imperfections
On day 14 of the Year 13 Recap we review some of the factors that can create imperfections in the labour market.
The labour market of an industry is in equilibrium when the demand for and supply of labour intersect each other. This determines the equilibrium wage rate and the number of people employed in the industry.
However, like any other market, there are often disturbances which can cause a disequilibrium in the labour market. These frictions and barriers are officially defined as labour market imperfections as they prevent the equilibrium wage rate from settling. In an exam situation you will often be tasked with having to assess the implications of a policy such as the imposition of a minimum wage or the increased presence of trade unions.
Here Jacob runs through the labour market imperfections revision slide:
