Distinguish between occupational and geographical immobility.

Occupational immobility is being unable to move between jobs because skills do not transfer, whereas geographical immobility is being unable to move to where the jobs are.

Give two causes of occupational immobility of labour.

A lack of transferable skills, and the time and cost involved in retraining.

Name three causes of geographical immobility in the UK.

Large differences in house prices between regions, family and school ties, and the cost of moving home.

How does factor immobility contribute to structural unemployment?

Workers made redundant in a declining industry cannot fill the vacancies in growing industries, so unfilled jobs and unemployment exist side by side.

Why is capital sometimes immobile as well as labour?

Specialised machinery and buildings often have no alternative use, so they lie idle rather than being redeployed when demand shifts.

Edexcel A-Level Economics B 9EB0

Scarcity, Choice and Potential Conflicts

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Enterprise, Business and the Economy

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Market Failure Across the Economy

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Macroeconomic Policies and Impact on Firms and Individuals

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Market Failure Across the Economy

Factor immobility and information failure

3 things to know
Papers 1 and 3

Overview

Factor immobility, occupational and geographical immobility of labour and their causes in the UK, structural unemployment, immobile capital, lost efficiency, policies to reduce immobility, higher costs for firms, imperfect and asymmetric information, the second-hand car market, market failure, moral hazard, and closing the information gap with customers.

What you need to know

Answer each one before you reveal it.

Your recallNot started

Key term

What stops workers moving between jobs and between regions, and why does that matter for output?

Key term

Distinguish three ways in which information can fail in a market.

Key term

What is factor immobility?

Questions from this subtopic

Each one with the model answer underneath.

1
What is factor immobility?
Model answer
Factor immobility is the inability of factors of production to move between uses or between places in response to changes in demand.
2
Distinguish between occupational and geographical immobility.
Model answer
Occupational immobility is being unable to move between jobs because skills do not transfer, whereas geographical immobility is being unable to move to where the jobs are.
3
Give two causes of occupational immobility of labour.
Model answer
A lack of transferable skills, and the time and cost involved in retraining.
4
Name three causes of geographical immobility in the UK.
Model answer
Large differences in house prices between regions, family and school ties, and the cost of moving home.
5
How does factor immobility contribute to structural unemployment?
Model answer
Workers made redundant in a declining industry cannot fill the vacancies in growing industries, so unfilled jobs and unemployment exist side by side.
6
Why is capital sometimes immobile as well as labour?
Model answer
Specialised machinery and buildings often have no alternative use, so they lie idle rather than being redeployed when demand shifts.

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