Question

List each of the three broad forces that together determine the labour market outcomes (wages and the number of jobs) in the economy. Identify and explain which force is responsible for the fact that there is no supply of labour in the province of Ontario below the minimum wage

Answer 1

labour market:The labour market also known as the job market , refers to the supply and demand of labour.in which employees provide the supply and employees provide the demand.

The 3 broad forces that together determine the labour outcomes in the economy are:

1. Substitution

2. Income

3.educational attainment

The force that is responsible for the fact that is no supply of labour at below the minimum wage is substitution .

This substitution effect is relevant to the individual labour supply curve rather than industry labour supply curve. The substitution effect explains the upwards sloping section of the labour supply curve- as the wage rate rises , workers are willing to work more hours and substitute away from their leisure time,because the opportunity cost of leisure time rises with a higher wage rate.