1. Labor Markets
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2. Demand and Supply of Resources
Derived Demand-Demand for good or service produced by the resource
Productivity-output produced by a resource
Market Supply of Resources
Equilibrium wage

3. Nonwage Determinants of Labor Demand
Demand for final Product
Prices of other resources
Resource substitutes
Resource Complements
Technology

4. Nonwage Determinants of Labor supply
Worker Wealth
Working Conditions
Tastes for Work

5. Wage Determination: why they differ
Differences in: Training
Education
Age
Experience
Ability
Risk
Geographic
Job Discrimination (Race, Ethnicity, Gender, Sexual orientation)
Union Membership

6. The Minimum Wage 2007 USA from $5.15 to 7.25
Minimum wage law- establishes a minimum amount an employer can pay a worker for an hour of labor
High opportunity cost of school

8. Labor Unions
Workers join forces to improve their pay and working conditions by negotiating a labor contract with their employers
1886 AFL (American Federation of Labor)
Clayton Act of unions not taxed, exempt from anti-trust
Right to work law- workers do no have to join union or pay union dues

9. Labor Unions
Collective Bargaining- process which union representatives negotiate with an employer about wages, benefits, and working conditions
Strike- Unions attempt to withhold labor from the employer
Mediator- listens to both sides comes up with a solution
Binding Arbitration-government has third party settle dispute, which must be accepted

10. Union Wages and Employment
Reduce supply of Labor
Get employers to hire only union labor
Long apprenticeship periods
Licensing

11. Union Wages and Employment
Increase Demand for Union Labor
Increase Demand for Union Products
Restrict Supply of Nonunion-made products
Increase productivity of union labor
Featherbedding- Unions attempt to ensure that more union labor is hired than the employer would prefer
Union Pay is Higher- 15% more than non union

12. Trend in union Membership
Membership by state
NY 24.2% AK22.9% HI 21.8% CA 17.5%
NC 3.2% LA 4.3%
Reasons for Declining Membership
Changes in Economy (away from manufacturing)
Competition from nonunion firms (imports)
Strikes are fewer and less effective (higher permanent replacements)