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Téma 3
The supply curve of labour shows the amount of labour which is supplied to the market at a
particular wage rate.
Individual workers
For an individual worker the supply of labour is the number of hours that he/she is
prepared to work.
As the real wage rate rises, a worker is likely to want to work longer hours.
The real wage shows what the wage of the worker can actually buy, so it takes into
account the changes in prices of goods.
Above a certain real wage rate the number of hours worked will decrease.
Supply to an industry
The higher the real wage rate is, the more workers are prepared to offer their services
to the labour market.
Different conditions can influence the demand for and supply of labour:
Government intervention in the labour market - governments usually intervene in the
labour market in order to reach social aims, for example to ensure that all employees
are paid at least a minimum amount or to prevent discrimination.
Trade unions and professional groups - these organizations' task is to protect the
interests of their members. They usually attempt to increase or maintain the pay levels
of their members. Their aim can be also to restrict the supply to a particular market.
The amount of unemployment - at higher levels of unemployment businesses are able
to recruit from a larger pool of labour, and the increased supply may force down the
equilibrium rate. Labour shortages are likely to have the opposite effect.