S4 CH4

A. Labor
 labor = human effort (mental + physical) in production
 labor return = wage
 labor supply
 = total #. of working hrs
 = worker number ∗ working hrs per worker

B. Factor affect labor supply

 Remark: 講有幾多人做野同做幾耐 ; 唔關效率事

1) population size:
 ↑ birth rate / ↓ death rate / ↓ immigration to foreign → ↑ population size
 ↑ population size →↑ working population → ↑ labor supply

2) working population size:

 ↓ school leaving age / ↑ retire age / ↑ male population
→ ↑ working population
 ↑ working population → ↑ labor supply

3) wage lv. :
↑ wage lv. / ↑ job benefit → ↑ working incentive → attract ↑ labor
→ ↑ labor supply

4) govt. policies:
 foreign labor importation policy → ↑ labor supply
 provide ↑ day child care → ↑ labor supply
 ↓ statutory holidays → ↑ labor supply
 ↓ unemployment allowance → ↑ labor supply
 offer ↓ university place → ↑ labor supply

5) social customs 習俗& practices:

region discourage women working → ↓ labor supply

C. (average) Labor productivity

 Remark: 講效率 only ; 唔關 labor supply 事

 = output per man hour

𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 (𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜)
 = 𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙 𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠
 ↑ labor productivity →
 same labor qty produce ↑ output
 same output produced by ↓ labor qty

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D. Factors affect labor productivity

1) education& training:
↑ education& training → ppl skillful → ↑ labor productivity

2) rewards& benefit:
↑ promotion prospect 升職前景 + high pay
→ ↑ working incentive → ↑ labor productivity

3) working environment:
good working envt. & worker health → ↑ labor productivity

4) division of labor:
division of labor → worker specialize job → ↑ labor productivity

5) capital amount& quality:

↑ capital amount& quality → ↑ labor productivity

E. Labor occupation mobility

 = ease labor change from 1 type of job to another

 factors affect

1) worker income:
↑ income → ↑opportunity cost changing occupation → ↓ occupation mobility

2) non monetary returns:

↑ non monetary return (e.g better promotion prospect) → ↓ occupation mobility

3) professional skills:
professional need long time training → ↑ wage → ↓ occupation mobility

4) professional qualification& license restriction:

need professional qualification / license restriction → ↓ occupation mobility

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F. Labor Geographical Mobility
 = ease labor move from 1 place to another

 factors affect

1) transport:
transport convenient + ↓ cost
→ worker willing change work place → ↑ geographical mobility

2) economic& political conditions:

political unrest / poor economic conditions
→ drive ppl to other country → ↑ geographical mobility

3) immigration policy:
restrict foreign labor quota → foreign worker geographical mobility ↓

G. Different types of wage payment method

1) piece rate:
 worker paid according output produced qty
↑ output → ↑ income
 suitable for worker output easily measured job (high degree of standardization)

 employer ADV:
1) earn ↑ → produce ↑ → ↑ worker working incentive& productivity
2) ∵ ↑ working incentive → ↓ supervision cost
3) wage automatically adjust according worker output
→ production cost easy control

 employee ADV:
1) ∵ ↑ productive worker → earn ↑ ∴ fair payment system

 employer DISADV:
1) employer set P for each output + calculate worker output
→ costly calculate wage payment
2) worker rush work → poor quality + wastage → ↑ quality control cost

 employee DISADV:
1) output produced ↓ → worker earn ↓ → unstable income

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2) time rate:
 worker paid according total working time
 suitable for worker output hard to measure job

 employer ADV:
1) wage paid according to working time → wage payment calculate cost ↓
2) worker focus ↓ output produced qty → quality control cost ↓
3) stable income → easy maintain team of staff

 employee ADV:
1) worker know how much they earn → stable income

 employer DISADV:
1) worker working incentive ↓ → ↑ supervision cost
2) wage not automatically adjust according worker output
→ wage negotiation cost ↑

 employee DISADV:
1) unfair to productive worker ∵ not paid according output qty

3) profit sharing (bonus):

 worker share company profit as bonus
sometimes include basic salary

 employer ADV:
1) earn ↑ → produce ↑ → ↑ worker working incentive& productivity
2) ∵ ↑working incentive → ↓ supervision cost
3) share business risk → business risk ↓
∵ not pay bonus if firm no profit
4) wage automatically adjust according worker output
→ production cost easy control

 employee ADV:
1) earn ↑ if firm earn ↑ profit

 employer DISADV:
1) calculate wage payment cost > time rate
→ extra cost measure contribution& distribute profit

 employee DISADV:
1) worker bear risk
∵ income fluctuate → suffer if firm no profit

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4) basic salary + commission:
 basic salary according time rate
commission calculate as sales vol.

 employer ADV:
1) working incentive ↑ → worker provide ↑ service standard
2) ∵ ↑ working incentive → ↓ supervision cost
3) share business risk → business risk ↓ ∵ commission varies with sales vol.
4) wage automatically adjust according worker output
→ production cost easy control

 employee ADV:
1) ↑ productive worker → earn ↑

 employer DISADV:
1) ↑ cost count sales vol. & assess performance

 employee DISADV:
1) unstable income ∵ depend on sales vol.

5) revenue sharing scheme:

 worker share sales revenue with firm

 employer ADV:
1) share business risk → business risk ↓
∵ ↓ sale revenue → firm & worker receive ↓

 employee ADV:
1) ↑ productive worker → earn ↑

 employer DISADV:
1) ↑ cost calculate revenue ∵ party having sales revenue info. cheat

 employee DISADV:
1) unstable income ∵ no basic salary

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 6) tips:
 customer paid to worker who provide service to them

 employer ADV:
1) ∵ ↑ working incentive → ↓ supervision cost
2) share business risk → business risk ↓

 employee ADV:
1) ↑ productive worker → earn ↑

 employer DISADV:
1) costly calculate wage payment
2) hard recruit worker ∵ worker may not want near risk

 employee DISADV:
1) unstable income ∵ income fluctuate with tips

H. Division of labor (=specialization of labor)

 worker specialize in produce particular good / service / stage of production

 types
1) simple division of labor:
engage different occupation → specialize produce different G&S
2) complex division of labor:
production process broken up in different sub-process
3) regional division of labor:
region specialize produce one particular product

I. Division of labor ADV

1) ↑ labor productivity:
 ∵ practice makes perfect: ↑ time spend on particular good → ↑ skillful
 ∵ choosing right person: worker specialize job according talents + skills
 ∵ saving time in training: worker not need know entire production process
 ∵ saving time in moving around: ↓ time moving 1 stage to another
 ∵ mechanization 機械化: break down production process
→ easy use capital goods& machine do simple task

2) ↓ production equipment cost:

∵ fully utilize production equipment + ↓ #. tool used → resource saved

3) ↑ living standard:
∵ enable produce ↑ G&S → ↑ product for consumer

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J. Division of labor DISADV
1) work become dull& monotonous:
∵ worker repeat job everyday

2) over interdependence:
disruption in 1 production stage → other stage affected

3) ↑ unemployment risk:
worker only know 1 job skill → occupational mobility ↓

4) loss of craftsmanship:
∵ mechanization → product standardized → craftsmanship ↓

K. What limits division of labor degree

1) market size:
small market size → division of labor benefit not significant → unsold stock

2) product nature:
product require unique skill& talent& uniqueness → division of labor not beneficial

3) trade condition:
trade restricted → country produce other goods for self sufficient 自給自足
→ discourage regional division of labor