McTaggart, Findlay, Parkin: Microeconomics © 2007 Pearson Education Australia Appendix to Chapter 14: Market Power in the Labour Market.

Slides:



Advertisements
Similar presentations
1 CHAPTER.
Advertisements

17 MARKET POWER IN THE LABOR MARKET APPENDIX.
Chapter 3: Demand and Supply.
Copyright McGraw-Hill/Irwin, 2005 Labor, Wages, and Earnings General Level of Wages Real Wages and Productivity Purely Competitive Labor Market.
14 DEMAND AND SUPPLY IN FACTOR MARKETS CHAPTER.
Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Microeconomics 7/e by Jackson and McIver Slides prepared by Muni Perumal, University of Canberra,
Chapter 15 - Resource markets. Economic Resources Resource Resource Payment land rent labor wages capital interest entrepreneurial ability profit.
Lecture 5 Labor Market Equilibrium Workers prefer to work when the wage is high, and firms prefer to hire when the wage is low. Labor market equilibrium.
17 Markets for Factors of Production
1 © 2010 South-Western, a part of Cengage Learning Chapter 11 Labor Markets Microeconomics for Today Irvin B. Tucker.
Profit Maximization and Derived Demand A firm’s hiring of inputs is directly related to its desire to maximize profits –any firm’s profits can be expressed.
Roger LeRoy Miller © 2012 Pearson Addison-Wesley. All rights reserved. Economics Today, Sixteenth Edition Chapter 29: Unions and Labor Market Monopoly.
Agenda Collect HW Review/Overview Unions and Minimum Wage Stocks Research Reporting Former Students HW.
© 2002 McGraw-Hill Ryerson Ltd.Chapter 7-1 Chapter Seven Wages and Employment in a Single Labour Market Created by: Erica Morrill, M.Ed Fanshawe College.
Introduction to Labor Markets Chapter 3: Short-run labor demand.
Ch. 27: Wages, Unions, and Labor
Agenda Collect HW Review/Overview Unions and Minimum Wage Stocks Research Reporting Former Students HW.
15-1 Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Microeconomics 8e, by Jackson & McIver By Muni Perumal, University of Canberra, Australia.
Supply Side policies AS Economics.
©2002 South-Western College Publishing
Markets for Factors of Production CHAPTER 17. After studying this chapter you will be able to Explain the link between a factor price and factor income.
The Labor Market Chapter 8 Copyright © 2011 by The McGraw-Hill Companies, Inc. All Rights Reserved.McGraw-Hill/Irwin.
McTaggart, Findlay, Parkin: Microeconomics © 2007 Pearson Education Australia Chapter 14: Demand and supply in factor markets.
1 Labor Markets l Principles of Microeconomic Theory, ECO 284 l John Eastwood l CBA 247 l l address:
1 Chapter 11 Practice Quiz Tutorial Labor Markets ©2000 South-Western College Publishing.
Chapter 29: Labor Demand and Supply
INPUT MARKET.
Labour and Capital Market
13 Wage Determination McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
16 McGraw-Hill/IrwinCopyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Wage Determination.
Economics Winter 14 January 29 th, 2014 Lecture 9 Ch. 5 : pp ; Ch. 6 (up to p. 138)
Chapter 30: Union and Labor Market Monopoly Power
Markets for Factors of Production
Ch 28 Wage Determination Most important price you will encounter in your lifetime will be your hourly wage rate It is critical to determining your economic.
Chapter Thirteen Labor Markets. Copyright © by Houghton Mifflin Company, Inc. All rights reserved Figure 13.1: Labor Demand Curve and Labor Supply.
Chapter 10: Perfect Competition.
Chapter 11: Monopoly.
PART FOUR Resource Markets
Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Microeconomics 7/e by Jackson and McIver Slides prepared by Muni Perumal, University of Canberra,
Wages and Employment in a Single Labour Market
Resource Market Mr. Barnett AP Microeconomics UHS.
1 Chapter 11 Practice Quiz Labor Markets Marginal revenue product measures the increase in a. output resulting from one more unit of labor. b. TR.
Monopoly profit ATC Quantity P 1 Q1Q1 0 Costs D MR MC ATC E1E1 Key Micro Relationships Socially Optimal P = MC Normal Profit P = ATC Max. Total Rev: MR.
Monopsony, Unions, & Bilateral Monopoly Labor Markets
Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Economic Concepts. Ch 12-Demand For Resources Derived Demand-from the products that resources produce. Marginal Revenue Product(MRP)-change in tl revenue.
Chapter 26 Imperfect Labor Market. Unions Unions – improve income, safety and job security of its members Right to work laws – it is illegal to require.
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. Labor Unions.
©2004 Prentice Hall Publishing Ayers/Collinge, 1/e 1 Chapter 22 “Market for Labor and Other Inputs”
CH. 28 : WAGE DETERMINATOIN. I.Looks at factors influencing prices of resources (workers). Last chapter focused on firms demand for the resource based.
18 MARKETS FOR FACTORS OF PRODUCTION © 2012 Pearson Education.
13 Wage Determination McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Labor Markets Supply and Demand Wages  Wage = Price of labor including fringe benefits  Real wage = adjustment for inflation.
Wage determination essay There are several factors that can influence wages. One will be in the question e.g. discuss the extent to which the minimum wage.
Chapter 15 Wage Determination Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent.
1 Chapter 11 Labor Markets Key Concepts Key Concepts Summary Summary Practice Quiz Internet Exercises Internet Exercises ©2000 South-Western College Publishing.
DEMAND FOR LABOUR According to this theory the wage is determined by the demand and supply of labour in the market. The demand for labour (DL) is a derived.
McGraw-Hill/Irwin Chapter 10: Wage Determination Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
Monopsony Lesson aims:
Labor, Wages, and Earnings
28 C H A P T E R HELP WANTED Wage Determination.
Sides Game.
CHAPTER 14 OUTLINE 14.1 Competitive Factor Markets 14.2 Equilibrium in a Competitive Factor Market 14.3 Factor Markets with Monopsony Power 14.4 Factor.
EOCT Review Microeconomics.
The Markets for the Factors of Production
Labor Markets Supply and Demand. Labor Markets Supply and Demand.
Economics for Today Irvin B. Tucker
THE ECONOMICS OF LABOUR MARKETS
EQUATION 2.1 Demand Function.
Markets for factor inputs
Presentation transcript:

McTaggart, Findlay, Parkin: Microeconomics © 2007 Pearson Education Australia Appendix to Chapter 14: Market Power in the Labour Market

A14-2 McTaggart, Findlay, Parkin: Microeconomics © 2007 Pearson Education Australia Market Power in the Labour Market  Just as a monopoly firm can restrict output and raise price, so can a monopoly owner of a resource restrict supply and raise price.  The main source of market power in labour markets is a labour union, which is an organised group of workers that aims to increase wages and influence other job conditions.

A14-3 McTaggart, Findlay, Parkin: Microeconomics © 2007 Pearson Education Australia Market Power in the Labour Market  A Union in a Competitive Labour Market  Unions try to restrict the supply for union labour and raise the wage rate.  But this action also decreases the quantity of labour demanded.

A14-4 McTaggart, Findlay, Parkin: Microeconomics © 2007 Pearson Education Australia DcDc A Union in a Competitive Market DuDu SuSu ScSc Labour (hours per day) Wage rate (dollars per hour) Figure A14-1

A14-5 McTaggart, Findlay, Parkin: Microeconomics © 2007 Pearson Education Australia Market Power in the Labour Market  How Unions Try to Change the Demand for Labour  A union tries to make the demand for union labour inelastic and to increase its demand  This lowers the employment lost from a higher wage rate  Unions try to increase the demand for union labour by making them more productive through training schemes, apprenticeships and other on-the-job training activities.  Unions action increase the supply of labour in non-union markets.

A14-6 McTaggart, Findlay, Parkin: Microeconomics © 2007 Pearson Education Australia Monopsony  A monopsony is a market with a single buyer.  The employer determines the wage rate and pays the lowest wage at which it can attract the labour it plans to employ  A monopsony makes a bigger profit than a group of firms that compete with each other for their labour  The ability of a monopsony to cut the wage rate and employment and make an economic profit depends on the elasticity of labour supply

A14-7 McTaggart, Findlay, Parkin: Microeconomics © 2007 Pearson Education Australia MRP = D A Monopsony Labour Market MCL S Labour (hours per day) Wage rate (dollars per hour) Competitive equilibrium Monopsony equilibrium Figure A14-2

A14-8 McTaggart, Findlay, Parkin: Microeconomics © 2007 Pearson Education Australia Monopsony  Monopsony and a Union  Sometimes both the firm and the employees have market power when a monopsony encounters a labour union, a situation called a bilateral monopoly.  In bilateral monopoly bargaining determine the wage rate

A14-9 McTaggart, Findlay, Parkin: Microeconomics © 2007 Pearson Education Australia Monopsony  Monopsony and the Minimum Wage  The imposition of a minimum wage may actually increase the level of labour hired by a monopsony.  Figure A14.3 shows why.

A14-10 McTaggart, Findlay, Parkin: Microeconomics © 2007 Pearson Education Australia Minimum wage MRP Minimum Wage Law in Monopsony MCL S Labour (hours per day) Wage rate (dollars per hour) Increase in employment Figure A14-3

A14-11 McTaggart, Findlay, Parkin: Microeconomics © 2007 Pearson Education Australia END CHAPTER 14 Appendix