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Economics pp 128-154 | Cite as

Factor Markets

  • Chris Mulhearn
  • Howard R. Vane
Chapter
Part of the Macmillan Foundations book series (PAFS)

Abstract

In previous chapters much of our discussion tended to concentrate on markets in 151 goods and services. In the present chapter we extend some of the concepts we have already introduced to the analysis of factor markets. Recall that there are four factors of production, the services of which are combined by firms in order to produce an output. They are:
  • labour

  • capital (factories, machines and so on)

  • land (all natural resources used in production)

  • entrepreneurial skill.

Factor markets are clearly of interest in themselves. It is important, for example, to understand the operation of the labour market. If the labour market fails to clear, unemployment may result. In such circumstances we need to consider what, if anything, can be done about it (see Chapter 11). An analysis of factor markets also allows us to understand how the income that a society generates is distributed amongst the groups that comprise it. In other words, such analysis will tell us why particular social groups — workers, entrepreneurs, the owners of capital and land — earn what they do. However, as we considered entrepreneurship in conjunction with the theory of the firm in Chapters 4 and 5, we shall concentrate here on the markets for capital, land and, especially, labour. We begin with an analysis of the labour market.

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Further reading

  1. Penn, R., M. Rose and J. Rubery (eds) Skill and Occupational Change (Oxford: Oxford University Press, 1994). Presents the findings of detailed research on the nature of job change in the UK in the 1980s.Google Scholar
  2. Paterson, I. and L. Simpson, ‘The economics of trade union power’, in N. M. Healey (ed.) Britain’s Economic Miracle: Myth or Reality? (London: Routledge, 1993). Provides a concise review of labour market reforms in the UK in the 1980s.Google Scholar
  3. Michie, J. and J. Grieve Smith (eds) Unemployment in Europe (London: Academic Press, 1994). Documents the growth of unemployment in Europe and considers the policy options for tackling it. This book may also be used to further explore some of the issues discussed in Chapter 11.Google Scholar
  4. Rees, T. Women and the Labour Market (London: Routledge, 1992). Considers the repro-duction of gender inequalities in the workplace and explores their implication for policy.Google Scholar

Copyright information

© Chris Mulhearn and Howard R. Vane 1999

Authors and Affiliations

  • Chris Mulhearn
  • Howard R. Vane

There are no affiliations available

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