Labour Economics

Labour Resource Land, LABOUR, capital, enterprise Direct demand – consumers “vote” Derived demand = depends on above “vote” Productivity – how much in a period of time MRPL  marginal product  extra production by addition of ONE unit of labour. See e.g. p 171 – 172 Market labour demand curve = quantity of labour demanded by all firms at each wage rate. ($, Q DL)

Curve Shift Factors Curve shows change in Q DL as P L changes BUT shifts can happen too: Change in the demand for the product of labour Increase in Q D of product  increase in Q DL Change in price of other input resources Tech advances Change in worker productivity Increase MRPL and increase Q DL

Supply of Labour Market Labour Supply Curve shows number of people willing to offer their services at each wage rate. Opportunity cost of working = what else they could be doing (personal value system) Level of skill involved (doctor v n’paper) Geographic location & type of labour market Distasteful jobs, service jobs, etc

Shifts in Supply Curve Change in income tax rates  lower net wage = left shift Change in composition of pop’n # of people available (retirement) Change in household technology Better tech = more work time – rt shift Change in attitude about work e.g.Role of women (15%  46%) Age restrictions (child labour) = left shift :::CU p 175

Wage determination Equilibrium agreement between HH and F No shortage or surplus. [unreal] Wage differentials – different labour markets Non-monetary benefits, vacation time, benefits, working conditions

Value of Skills E HSL - E LSL = Value of skills acquired