1. Overview of the Labor Market Labor: input into production of goods and services Labor market: Buyers and sellers of labor Buyers (demand side) 7 million firms Sellers (supply side) 150 million 142 million employees

2. Unique features of labor market 1.Can’t buy or sell people, rent services 2.People care, with whom they work 3.Long-term attachments 1.No explicit contract 2.Markets clear slowly 4.Market definitions 1.Geography 2.Skill-occupation 3.industry

3. Market clearing How do we assign 142 million people to 7 million employers?

4. Wages Common signal to supply-side and demand side –Demand-side: input price –Supply-side: source of purchasing power Real wage: purchasing power of wage = wage in current $/price level

5. Meisenheimer, Joseph R. “Real compensation, 1979 to 2003: analysis from several data.sources.” Monthly Labor Review 128 (May 2005): 3-22 Wages are 72% of total compensation

6. Meisenheimer, Joseph R. “Real compensation, 1979 to 2003: analysis from several data.sources.” Monthly Labor Review 128 (May 2005): 3-22 Benefits have risen faster than wages—due largely to cost of maintaining health insurance

7. Overview of the Labor Market Labor market: Demand-side: firms Supply side: labor force Common signal: Wage Aim: allocate workers to firms

8. Sincavage, Jessica R. “The labor force and unemployment: three generations of change” Monthly Labor Review 128 (June 2004): 34-41. Application : Baby-boom and the labor market

9. http://www.census.gov/ipc/prod/97agewc.pdf