Labor market in the long run

Июль 31, 2022

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Labor market in the long run

Содержание

2. LABOR MARKET The market for a specific occupation in a specific geographical area.
3. Less labor more leisure -- If Lester works 30 hours instead of 36, he gets 6
4. THE MARKET SUPPLY CURVE FOR LABOR Shows the relationship between the wage and the quantity of
5. THE MARKET SUPPLY CURVE FOR LABOR An increase in the wage affects the quantity of nursing
6. SUPPLY, DEMAND AND MARKET EQUILIBRIUM Wages $ Per Hour Hours of nursing per day 15 10
7. THE LONG-RUN DEMAND CURVE FOR LABOR Is derived demand, since firms use labor and other inputs
8. THE LONG-RUN DEMAND CURVE FOR LABOR An increase in the wage will decrease the quantity of
9. OTHER INPUT-SUBSTITUTION EFFECT EXAMPLES Mining. U. S. firms use huge earth-moving equipment to mine for minerals,
10. SUPPLY, DEMAND AND MARKET EQUILIBRIUM Wages $ Per Hour Hours of nursing per day 15 10
11. MARKET EQUILIBRIUM A situation in which there is no pressure to change the price of a
12. CHANGE IN DEMAND Causes price and quantity to move in the same direction: An increase in
13. Wages $ Per Hour Hours of nursing per day 15 16,000 e Original Demand Curve Market
14. CHANGE IN DEMAND Causes price and quantity to move in the same direction; An increase in
15. SUPPLY OF NANNIES WITH AND WITHOUT AU PAIR Wages $ per month 800 30 DEMAND Hours
16. NANNIES VERSUS AU PAIRS How would elimination of the au pair program affect the wage of
17. SUPPLY OF NANNIES WITH AND WITHOUT AU PAIR Wages $ per month 840 800 28 30
18. LABOR MARKET IN SHORT RUN Use the marginal principal: Increase the level of activity if its
19. $10 $10 $10 $10 $10 $10 $10 $10 $10 $10 LABOR MARKET IN SHORT RUN A
20. LABOR MARKET IN SHORT RUN Marginal Benefit The marginal benefit of labor equals the monetary value
21. Marginal revenue product or demand curve $ per hour Hours of labor per day MARGINAL REVENUE
22. MARGINAL REVENUE OF PRODUCT CURVE The marginal revenue of product curve is negatively sloped because of
23. MARGINAL REVENUE OF PRODUCT As the firm adds more workers to an existing production facility, each
24. Marginal revenue product or demand curve Marginal cost when wage = $15 $ per hour Hours
25. Marginal revenue product or demand curve Marginal cost when wage = $15 $ per hour Hours
26. SHORT-RUN LABOR DEMAND CURVE The MRP curve is the firm’s short-run demand curve for labor; It
27. WHAT CHANGES WOULD CAUSE THE DEMAND CURVE TO SHIFT ? Change in anything held fixed in
28. MARKET DEMAND AND EQUILIBRIUM The market demand curve for labor is the sum of the labor
29. SHORT-RUN SUPPLY CURVE The supply curve is relatively steep because in the short run, workers cannot
30. $ per Hour Short-run Market demand Short-run supply Hours of labor per day 15 10 2,000
31. WHY DO WAGES DIFFER ACROSS OCCUPATIONS ? Wage for a particular occupation will be high if
32. WHY WOULD SUPPLY OF WORKERS IN A PARTICULAR OCCUPATION BE SMALL ? 1. Few people with
33. Wages $ per Hour Market Demand Curve Market Supply Curve Hours of nursing per day Supply
34. WHY DO WOMEN, ON AVERAGE, EARN LESS THAN MEN ? Women in many occupations have less
35. WHAT ABOUT DIFFERENCES IN EARNINGS BY RACE ? Of full-time workers in 1995 Black males earned
36. WHAT ABOUT DIFFERENCES IN EARNINGS BY RACE ? For both males and females, part of the
37. WHY DO COLLEGE GRADUATES EARN HIGHER WAGES ? In 1982 the typical college graduate earned 82%
38. PUBLIC POLICY AND LABOR MARKETS Minimum Wage; Comparable Worth; Occupational Licensing
39. MARKET EFFECTS OF THE MINIMUM WAGE Wages $ per hour Hours of restaurant labor per day
40. EFFECTS OF THE MINIMUM WAGE Good news for workers -- Some workers keep their jobs and
41. COMPARABLE WORTH The government specifies a minimum wage for some occupations, typically occupations with a disproportionate
42. OCCUPATIONAL LICENSING In some occupations, the number of workers is limited by government-sanctioned licensing boards; For
43. OCCUPATIONAL LICENSING In principle, the licensing requirements are to protect consumers from incompetent workers; however, occupational
44. MARKET EFFECTS OF OCCUPATIONAL LICENSING Wages $ per hour Hours of Pharmacist labor per day (1,000)
45. LABOR UNIONS An organized group of workers, the main objective of which is to improve working
46. UNION MEMBER SHIP IN DIFFERENT COUNTRIES IN 1990 0 10 20 30 40 50 60 70
47. Today, one-fifth of all workers in the United States belong to a union, down from one-third
48. THREE WAYS A UNION TRIES TO INCREASE WAGES OF ITS MEMBERS 1. Organize and negotiate a
49. IMPERFECT INFORMATION AND EFFICIENCY WAGES Asymmetric Information Employers cannot always distinguish between skillful and unskillful workers
50. IMPERFECT INFORMATION AND EFFICIENCY WAGES To get some high-skill workers, the employer must pick a wage
51. HIGHER WAGES AT FORD MOTOR COMPANY When Ford raised daily wage from $3 to $5, the
52. MONOPSONY There is a single buyer of a particular market. Monopsonist faces positively-sloped supply for labor;
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Слайд 2

LABOR MARKET
The market for a specific occupation in a specific

geographical area.

Слайд 3

Less labor more leisure -- If Lester works 30 hours instead

of 36, he gets 6 hours of extra leisure, but still earns the same income per week.
Same amount of labor and more income -- If Sam continues to work 36 hours per week, he gets an additional $72 of income and the same amount of leisure time.
More labor, less leisure time, and much more income -- If Maureen works 43 hours instead of 36, she sacrifices 7 hours of leisure time and earns a total of $516.

THREE RESPONSES TO AN INCREASE IN WAGE ($10 to $12 per hour)

Слайд 4

THE MARKET SUPPLY CURVE FOR LABOR
Shows the relationship between the wage

and the quantity of labor supplied for a particular occupation;
The market supply is positively sloped, consistent with the law of supply:
The higher the wage (price of labor) the larger the quantity supplied

Слайд 5

THE MARKET SUPPLY CURVE FOR LABOR
An increase in the wage affects

the quantity of nursing supplied in three ways:
1. Change in hours per worker. Some nurses will work more hours, others will work fewer hours, and others will work the same number of hours;
2. Occupational Choice. An increase in nursing wage will cause some workers to switch from other occupations to nursing and more new workers to choose nursing.
3. Migration. Some nurses in other cities will move to earn higher wages.

Слайд 6

SUPPLY, DEMAND AND MARKET EQUILIBRIUM
Wages
$ Per Hour
Hours of nursing per day
15
10
8,000
16,000
b
e
Market

Supply
Curve

Слайд 7

THE LONG-RUN DEMAND CURVE FOR LABOR
Is derived demand, since firms use

labor and other inputs to produce goods and services: derived from the demand for the final product;
The long-run demand curve for labor is negatively sloped, consistent with the law of demand:
The higher the wage, the smaller the quantity of labor demanded.

Слайд 8

THE LONG-RUN DEMAND CURVE FOR LABOR
An increase in the wage will

decrease the quantity of labor demanded for two reasons:
1. The output effect. An increase in wage will decrease the quantity of output sold by firms that use nurses.
An increase in the nursing wage will increase the cost of medical services, causing people to spend less time in hospitals, so hospitals won’t need as many nurses.
2. The input-substitution effect. Firms will substitute other inputs for labor.

Слайд 9

OTHER INPUT-SUBSTITUTION EFFECT EXAMPLES
Mining. U. S. firms use huge earth-moving equipment

to mine for minerals, while some firms in less-developed countries use thousands of workers, digging by hand;
Furniture. Firms in developed countries manufacture furniture with sophisticated machinery and equipment, while some firms in less-developed countries make furniture by hand;
Accounting. Accountants in developed countries use computers and sophisticated software programs, while some accountants in less-developed countries use calculators and ledger paper.

Слайд 10

SUPPLY, DEMAND AND MARKET EQUILIBRIUM
Wages
$ Per Hour
Hours of nursing per day
15
10
8,000
16,000
24,000
b
e
c
Market

Demand
Curve

Market Supply
Curve

Слайд 11

MARKET EQUILIBRIUM
A situation in which there is no pressure to change

the price of a good or service;
The supply curve intersects the demand curve at point e, so the equilibrium wage is $15 and the equilibrium quantity is 16,000 hours of nursing per day;
At this wage, there is neither shortage or surplus of labor, so the market has reached and equilibrium.

Слайд 12

CHANGE IN DEMAND
Causes price and quantity to move in the same

direction:
An increase in demand increases the price and quantity;
A decrease in demand decreases the price and quantity;
An increase in demand will shift the demand curve to the right.

Слайд 13

Wages
$ Per Hour
Hours of nursing per day
15
16,000
e
Original Demand
Curve
Market Supply
Curve
THE MARKET EFFECTS

OF AN INCREASE IN
DEMAND FOR LABOR

19,000

New Demand
Curve

Слайд 14

CHANGE IN DEMAND
Causes price and quantity to move in the

same direction;
An increase in demand increases the equilibrium wage and the equilibrium quantity of nursing services.
CHANGE IN SUPPLY
An increase in supply decreases the price, but increases the quantity;
A decrease in supply increases the price but decreases the quantity;
An increase in supply will shift the supply curve to the right.

Слайд 15

SUPPLY OF NANNIES WITH AND WITHOUT AU PAIR
Wages $
per month
800
30
DEMAND
Hours

per month

Supply
with
au pair program

Слайд 16

NANNIES VERSUS AU PAIRS
How would elimination of the au pair

program affect the wage of nannies ?
The equilibrium wage for child-care services would, in this example, increase from $800 per month to $840 per month;
The number of child-care service hours offered would decrease from 30 to 28.

Слайд 17

SUPPLY OF NANNIES WITH AND WITHOUT AU PAIR
Wages $
per month
840
800
28
30
DEMAND
Hours

per month

Supply
without
au pair program

Supply
with
au pair program

Слайд 18

LABOR MARKET IN SHORT RUN
Use the marginal principal:
Increase the level of

activity if its marginal benefit exceeds its marginal cost, but reduce the level if the marginal cost exceeds the marginal benefit. If possible, pick the level at which the marginal benefit equals the marginal cost.

Слайд 19

$10
$10
$10
$10
$10
$10
$10
$10
$10
$10
LABOR MARKET IN SHORT RUN
A firm will pick the quantity of

labor at which the marginal benefit of labor equals its marginal cost;
Marginal Cost
If the firm is a price taker, it can hire as many workers as it wants at the market wage;
The firm’s marginal cost of labor is its hourly wage.

Слайд 20

LABOR MARKET IN SHORT RUN
Marginal Benefit
The marginal benefit of

labor equals the monetary value of the output produced with an additional hour of labor;
Marginal Product of Labor -- The change in output per unit change in labor;
Marginal Revenue of Product -- The price of the firm’s output times the marginal product of labor;
The marginal benefit of labor is the firm’s marginal revenue of product (MRP).
marginal benefit = marginal revenue of product (MRP) = price * marginal product

Слайд 21

Marginal revenue product
or demand curve
$ per
hour
Hours of labor per day
MARGINAL REVENUE

OF PRODUCT CURVE

Слайд 22

MARGINAL REVENUE OF PRODUCT CURVE
The marginal revenue of product curve

is negatively sloped because of the principal of diminishing returns;
Principal of Diminishing Returns
Suppose that output is produced with two or more inputs and that we increase one input while holding the other inputs fixed. Beyond some point -- called the point of diminishing returns -- output will increase at a decreasing rate.

Слайд 23

MARGINAL REVENUE OF PRODUCT
As the firm adds more workers to an

existing production facility, each worker uses a smaller piece of the firm’s production facility, so total output increases at a decreasing rate;
As quantity of labor increases, the marginal product of labor decreases;
If the marginal product of labor decreases and the price of labor is fixed, MRP decreases too.

Слайд 24

Marginal revenue product
or demand curve
Marginal cost when
wage = $15
$ per
hour
Hours

of labor per day

MARGINAL REVENUE OF PRODUCT CURVE

At $15 per hour, the firm could
not hire more than 20 hours,
because the additional revenue
from a 21st hour would be less
than the additional cost ($15).

Слайд 25

Marginal revenue product
or demand curve
Marginal cost when
wage = $15
$ per
hour
Hours

of labor per day

Marginal cost when
wage = $10

MARGINAL REVENUE OF PRODUCT CURVE

If the wage drops to $10, the firm
will satisfy the marginal principal
at n, hiring 30 hours of labor
instead of 20.

Слайд 26

SHORT-RUN LABOR DEMAND CURVE
The MRP curve is the firm’s short-run

demand curve for labor;
It shows the relationship between the wage and quantity of labor demanded in the short run.

Слайд 27

WHAT CHANGES WOULD CAUSE THE DEMAND CURVE TO SHIFT ?
Change

in anything held fixed in drawing the curve will shift the entire curve;
An increase in the price of the final good will increase the MRP of workers, shifting the entire demand curve to the right;
If workers become more productive, the increase in the marginal product of labor will increase the MRP and shift the demand curve to the right;
A decrease in price or labor productivity would shift the demand curve to the left.

Слайд 28

MARKET DEMAND AND EQUILIBRIUM
The market demand curve for labor is

the sum of the labor demands of all firms that use a particular type of labor;
If all firms are identical, multiply the number of firms by the quantity of labor demanded by the typical firm

Слайд 29

SHORT-RUN SUPPLY CURVE
The supply curve is relatively steep because in

the short run, workers cannot change occupations or migrate from one location to another;
The only response to a change in the wage is that existing workers change the number of hours they work:
When the wage increases, some workers work more, others work less, and others work about the same number of hours;
The net effect of these changes in work hours varies from one occupation to another.

Слайд 30

$ per
Hour
Short-run
Market demand
Short-run supply
Hours of labor per day
15
10
2,000
3,000
m
n
Market Equilibrium in the

Short Run

Слайд 31

WHY DO WAGES DIFFER ACROSS OCCUPATIONS ?
Wage for a particular

occupation will be high if the supply of workers in that occupation is small relative to the demand for workers.

Слайд 32

WHY WOULD SUPPLY OF WORKERS IN A PARTICULAR OCCUPATION BE SMALL

1. Few people with the required skills:
examples include professional athletes, musicians and actors;
2. High training costs:
examples include medical doctors and lawyers;
3. Undesirable job features:
examples include jobs with greatest risk of dying, jobs that are stressful, dirty, or force people to work odd hours;
4. Artificial barriers to entry:
examples include jobs that requires government or professional licensing, or union membership.

Слайд 33

Wages
$ per
Hour
Market Demand
Curve
Market Supply
Curve
Hours of nursing per day
Supply is Low

Relative to Demand

8,000

16,000

Слайд 34

WHY DO WOMEN, ON AVERAGE, EARN LESS THAN MEN ?
Women in

many occupations have less education and less work experience, so they are less productive and paid less;
Occupational discrimination:
- Women have been denied access to many occupations, causing them to flood a small number of “female- dominated” occupations;
- Given a plentiful supply in these occupations, wages are relatively low.

Слайд 35

WHAT ABOUT DIFFERENCES IN EARNINGS BY RACE ?
Of full-time workers in

1995
Black males earned 73% as much as white males;
Black females earned 86% as much as white females;
Hispanic males earned 62% as much as white males;
Hispanic females earned 73% as much as white females;

Слайд 36

WHAT ABOUT DIFFERENCES IN EARNINGS BY RACE ?
For both males and

females, part of the earnings gap is caused by differences in productivity:
-- On average, whites have more education and work experience, so they receive higher wages;
Part of the wage gap is caused by racial discrimination:
-- Some black and Hispanic workers receive lower wages for similar jobs;
-- Others are denied opportunities to work in some high-paying jobs.

Слайд 37

WHY DO COLLEGE GRADUATES EARN HIGHER WAGES ?
In 1982 the

typical college graduate earned 82% more than the typical high-school graduate.
The learning effect of a college education:
Students learn the skills required for certain occupations;
The signaling effect or screening effect of college:
Completion of college provides a signal to employers about the skills of a potential worker;
Colleges indirectly screen job applicants, separating admissible from the inadmissible.

Слайд 38

PUBLIC POLICY AND LABOR MARKETS
Minimum Wage;
Comparable Worth;
Occupational Licensing

Слайд 39

MARKET EFFECTS OF THE MINIMUM WAGE
Wages
$ per hour
Hours of restaurant labor

per day (1,000)

4.00

Supply

Demand

4.40

Слайд 40

EFFECTS OF THE MINIMUM WAGE
Good news for workers --
Some workers

keep their jobs and receive a higher wage ($4.40 an hour instead of $4.00);
Bad news for workers --
Some workers lose their jobs;
If the typical workday for a restaurant worker were 5 hours, the loss of 1,000 hours of restaurant work per day translates into a loss of 200 jobs;
Bad news for consumers --
The increase in the wage increase the cost of producing restaurant meals, increasing the price.

Слайд 41

COMPARABLE WORTH
The government specifies a minimum wage for some

occupations, typically occupations with a disproportionate number of women;
Some women in female-dominated occupations would earn higher wages;
Others would lose their jobs;
Consumers would pay higher prices.

Слайд 42

OCCUPATIONAL LICENSING
In some occupations, the number of workers is limited

by government-sanctioned licensing boards;
For example a person may be prohibited from working in an occupation unless he:
1. completes a given educational program;
2. passes an examination;
3. has a certain amount of work experience, and/or
4. has lived in a particular area for some time;
Among workers subject to occupational licensing are physicians, dentists, beauticians, plumbers, and pharmacists.

Слайд 43

OCCUPATIONAL LICENSING
In principle, the licensing requirements are to protect consumers

from incompetent workers; however, occupational licensing is criticized on three grounds:
1. Weak link between performance and licensing requirements. In many cases, licensing requirements seem arbitrary;
2. Alternative means of protection. The government could provide consumers with information about past performance of workers, or consumers could spread word of worker performance;
3. Easy restrictions. The licensing requirements increase the cost of entering the occupation, decreasing the supply of workers and increasing the wage.

Слайд 44

MARKET EFFECTS OF OCCUPATIONAL LICENSING
Wages
$ per hour
Hours of Pharmacist labor per

day (1,000)

Initial Supply: 5 years
of education

Demand

New Supply: 6 years
of education

Слайд 45

LABOR UNIONS
An organized group of workers, the main objective of

which is to improve working conditions, wages, and fringe benefits;
Workers in a union do not take wages as a given, but try to increase them.

Слайд 46

UNION MEMBER SHIP IN DIFFERENT COUNTRIES IN 1990
0
10
20
30
40
50
60
70
80
90
100
% of workers

in Unions

United
States

Japan

Canada

Germany

Britain

Italy

Denmark

Sweden

Слайд 47

Today, one-fifth of all workers in the United States belong

to a union, down from one-third forty years ago. Two Types of Unions:
A craft union includes workers from a particular occupation, for example, plumbers, bakers, or electricians;
An industrial union includes all types of workers from a single industry, for example, steel workers or auto workers.
There are also umbrella organizations that include many individual unions.
The largest of these is the AFL CIO (the American Federation of Labor Congress of Industrial Organizations).

LABOR UNIONS

Слайд 48

THREE WAYS A UNION TRIES TO INCREASE WAGES OF ITS MEMBERS
1.

Organize and negotiate a higher wage;
Generates a tradeoff between wages and total employment;
2. Promote products produced by union workers;
By increasing demand for a final good, demand is increased for labor (derived demand), increasing equilibrium wage;
3. Impose work rules that increase the amount of labor required to produce a given quantity of output;

Слайд 49

IMPERFECT INFORMATION AND EFFICIENCY WAGES
Asymmetric Information
Employers cannot always distinguish between skillful

and unskillful workers and between hard workers and lazy ones.
Suppose two types of workers:
low skill (marginal revenue of product = $100 per day)
high skill (marginal revenue of product = $200 per day)
What is an appropriate single wage ?
- Suppose the opportunity cost of high-skill workers is $130 and a firm offers a wage of $110;
- Only low skill workers will apply for jobs;
- The firm will lose money because the wage ($110) exceeds the marginal revenue of product of low-skill workers ($100).

Слайд 50

IMPERFECT INFORMATION AND EFFICIENCY WAGES
To get some high-skill workers, the employer

must pick a wage that exceed the opportunity cost ($130);
As firm increases its wages:
- It attracts more high-skill workers;
- the average productivity of its workforce will increase;
- depending on responses of two types of workers to higher wage, a firm could actually make more profit by offering a higher wage;
Paying efficiency wages
The firm pays higher wages to increase the average productivity of its workforce.

Слайд 51

HIGHER WAGES AT FORD MOTOR COMPANY
When Ford raised daily wage

from $3 to $5, the average productivity of Ford workers increased by over 50%, a result of several change in the workforce:
The pool of job applicants improved, so Ford could choose better workers;
Fewer workers were fired for shirking;
Fewer workers quit voluntarily;
The rate of absenteeism decreased.

Слайд 52

MONOPSONY
There is a single buyer of a particular market.
Monopsonist faces

positively-sloped supply for labor;
It is the only employer, so its hiring decisions affect the market wage;
Monopsinist picks a point along the market supply curve for labor;
The monopsonist will control its labor costs by picking a relatively low wage, in the process of hiring a relatively small quantity of labor.

Labor market in the long run

Содержание

LABOR MARKET The market for a specific occupation in a specific

Less labor more leisure -- If Lester works 30 hours instead

THE MARKET SUPPLY CURVE FOR LABORShows the relationship between the wage

THE MARKET SUPPLY CURVE FOR LABORAn increase in the wage affects

SUPPLY, DEMAND AND MARKET EQUILIBRIUMWages$ Per HourHours of nursing per day15108,00016,000beMarket

THE LONG-RUN DEMAND CURVE FOR LABORIs derived demand, since firms use

THE LONG-RUN DEMAND CURVE FOR LABORAn increase in the wage will

OTHER INPUT-SUBSTITUTION EFFECT EXAMPLESMining. U. S. firms use huge earth-moving equipment

SUPPLY, DEMAND AND MARKET EQUILIBRIUMWages$ Per HourHours of nursing per day15108,00016,00024,000becMarket

MARKET EQUILIBRIUMA situation in which there is no pressure to change

CHANGE IN DEMANDCauses price and quantity to move in the same

Wages$ Per HourHours of nursing per day1516,000eOriginal DemandCurveMarket SupplyCurveTHE MARKET EFFECTS

CHANGE IN DEMAND Causes price and quantity to move in the

SUPPLY OF NANNIES WITH AND WITHOUT AU PAIRWages $ per month80030DEMANDHours

NANNIES VERSUS AU PAIRS How would elimination of the au pair

SUPPLY OF NANNIES WITH AND WITHOUT AU PAIRWages $ per month8408002830DEMANDHours

LABOR MARKET IN SHORT RUNUse the marginal principal:Increase the level of

$10$10$10$10$10$10$10$10$10$10LABOR MARKET IN SHORT RUNA firm will pick the quantity of

LABOR MARKET IN SHORT RUN Marginal Benefit The marginal benefit of

Marginal revenue productor demand curve$ perhourHours of labor per dayMARGINAL REVENUE

MARGINAL REVENUE OF PRODUCT CURVE The marginal revenue of product curve

MARGINAL REVENUE OF PRODUCTAs the firm adds more workers to an

Marginal revenue productor demand curveMarginal cost when wage = $15$ perhourHours

Marginal revenue productor demand curveMarginal cost when wage = $15$ perhourHours

SHORT-RUN LABOR DEMAND CURVE The MRP curve is the firm’s short-run

WHAT CHANGES WOULD CAUSE THE DEMAND CURVE TO SHIFT ? Change

MARKET DEMAND AND EQUILIBRIUM The market demand curve for labor is

SHORT-RUN SUPPLY CURVE The supply curve is relatively steep because in

$ perHourShort-runMarket demandShort-run supplyHours of labor per day15102,0003,000mnMarket Equilibrium in the

WHY DO WAGES DIFFER ACROSS OCCUPATIONS ? Wage for a particular

WHY WOULD SUPPLY OF WORKERS IN A PARTICULAR OCCUPATION BE SMALL

Wages$ perHourMarket DemandCurveMarket Supply CurveHours of nursing per daySupply is Low

WHY DO WOMEN, ON AVERAGE, EARN LESS THAN MEN ?Women in

WHAT ABOUT DIFFERENCES IN EARNINGS BY RACE ?Of full-time workers in

WHAT ABOUT DIFFERENCES IN EARNINGS BY RACE ?For both males and

WHY DO COLLEGE GRADUATES EARN HIGHER WAGES ? In 1982 the

PUBLIC POLICY AND LABOR MARKETSMinimum Wage;Comparable Worth;Occupational Licensing

MARKET EFFECTS OF THE MINIMUM WAGEWages$ per hourHours of restaurant labor

EFFECTS OF THE MINIMUM WAGEGood news for workers -- Some workers

COMPARABLE WORTH The government specifies a minimum wage for some

OCCUPATIONAL LICENSING In some occupations, the number of workers is limited

OCCUPATIONAL LICENSING In principle, the licensing requirements are to protect consumers

MARKET EFFECTS OF OCCUPATIONAL LICENSINGWages$ per hourHours of Pharmacist labor per

LABOR UNIONS An organized group of workers, the main objective of

UNION MEMBER SHIP IN DIFFERENT COUNTRIES IN 19900 102030405060708090100% of workers

Today, one-fifth of all workers in the United States belong

THREE WAYS A UNION TRIES TO INCREASE WAGES OF ITS MEMBERS1.

IMPERFECT INFORMATION AND EFFICIENCY WAGESAsymmetric InformationEmployers cannot always distinguish between skillful

IMPERFECT INFORMATION AND EFFICIENCY WAGESTo get some high-skill workers, the employer

HIGHER WAGES AT FORD MOTOR COMPANY When Ford raised daily wage

MONOPSONY There is a single buyer of a particular market.Monopsonist faces

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$10
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$10
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LABOR MARKET IN SHORT RUN
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LABOR MARKET IN SHORT RUN
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$ per
hour
Hours of labor per day
MARGINAL REVENUE

MARGINAL REVENUE OF PRODUCT CURVE
The marginal revenue of product curve

MARGINAL REVENUE OF PRODUCT
As the firm adds more workers to an

Marginal revenue product
or demand curve
Marginal cost when
wage = $15
$ per
hour
Hours

Marginal revenue product
or demand curve
Marginal cost when
wage = $15
$ per
hour
Hours

SHORT-RUN LABOR DEMAND CURVE
The MRP curve is the firm’s short-run

WHAT CHANGES WOULD CAUSE THE DEMAND CURVE TO SHIFT ?
Change

MARKET DEMAND AND EQUILIBRIUM
The market demand curve for labor is

SHORT-RUN SUPPLY CURVE
The supply curve is relatively steep because in

$ per
Hour
Short-run
Market demand
Short-run supply
Hours of labor per day
15
10
2,000
3,000
m
n
Market Equilibrium in the

WHY DO WAGES DIFFER ACROSS OCCUPATIONS ?
Wage for a particular

Wages
$ per
Hour
Market Demand
Curve
Market Supply
Curve
Hours of nursing per day
Supply is Low

WHY DO WOMEN, ON AVERAGE, EARN LESS THAN MEN ?
Women in

WHAT ABOUT DIFFERENCES IN EARNINGS BY RACE ?
Of full-time workers in

WHAT ABOUT DIFFERENCES IN EARNINGS BY RACE ?
For both males and

WHY DO COLLEGE GRADUATES EARN HIGHER WAGES ?
In 1982 the

PUBLIC POLICY AND LABOR MARKETS
Minimum Wage;
Comparable Worth;
Occupational Licensing

MARKET EFFECTS OF THE MINIMUM WAGE
Wages
$ per hour
Hours of restaurant labor

EFFECTS OF THE MINIMUM WAGE
Good news for workers --
Some workers

COMPARABLE WORTH
The government specifies a minimum wage for some

OCCUPATIONAL LICENSING
In some occupations, the number of workers is limited

OCCUPATIONAL LICENSING
In principle, the licensing requirements are to protect consumers

MARKET EFFECTS OF OCCUPATIONAL LICENSING
Wages
$ per hour
Hours of Pharmacist labor per

LABOR UNIONS
An organized group of workers, the main objective of

UNION MEMBER SHIP IN DIFFERENT COUNTRIES IN 1990
0
10
20
30
40
50
60
70
80
90
100
% of workers

THREE WAYS A UNION TRIES TO INCREASE WAGES OF ITS MEMBERS
1.

IMPERFECT INFORMATION AND EFFICIENCY WAGES
Asymmetric Information
Employers cannot always distinguish between skillful

IMPERFECT INFORMATION AND EFFICIENCY WAGES
To get some high-skill workers, the employer

HIGHER WAGES AT FORD MOTOR COMPANY
When Ford raised daily wage

MONOPSONY
There is a single buyer of a particular market.
Monopsonist faces