Individual’s Choice of occupation



Earning of the people is from different sources.   The largest share of factor rewards contributed to national income is the reward for labour. The factor reward for the services for labour is wage .i.e. price of labour.


The Labour market will consists of all those people who are able and willing to supply themselves for work (supply side) and  all those people and firms able and willing to employ them (demand side). 
There are many different markets for labour, i.e. local, national or international.  Labour markets will also exist for every different occupation or type of skill (computer programmers, carpenters, hair stylists etc.)  
Wages paid in all these markets are determined by the forces of demand and supply of labour and it varies according to various reasons.

There are many factors that affect an individual’s choice of occupation. [2014 SP P2 Q1d]  These may be of wage factor and non-wage factor.
The wage factor is the most important factor considered in choosing the job. It is related to the money income received. The mode, in which the income is receiving is also to be considered in this regard.   The mode of income may be in the form of daily wages, commission, work-contract (piece-rate working)  or monthly salary. Possible overtime allowance, bonus payments are also considered in this wage factor.
The quantum of income derived from the job is not the only factor that affects the individual’s decision; but the non-wage factors are also to be considered.
The non-wage factors that an individual consider are;
1) Fringe benefits or perks available. These are the facilities provided by the employer free of cost to their employees, such as - company car,  Free  life insurance, free pension, free health care facilities and so on. 
2) Promotion or career prospects,
3) Possible job satisfaction,
4) The extend of job security,
5) Location of the work,  
6) Working conditions,
7) Availability and types of holidays,
8) Leave entitlements,  
9) Size and reputation of the establishment,
10) Type or the nature of work to do,

All of these things that affect the choice of an individual together are called the net benefits or advantages of the job. 
Changes in the net advantages of a job will cause a shift (change in demand due to changes other than price) in the supply of labour in an industry.  
For example, a decline in the pay and the benefits of a job relative to other jobs will cause a fall in the supply of labour. This may be shown in the above diagram. An equilibrium wage rate is determined in the labour market by the demand for,   and supply of labour of a particular group of workers. (When demand for, is equal to the supply of labour)