1. Chapter 2 Overview of the Labor Market

2. Copyright © 2003 by Pearson Education, Inc.2-2 Outline The labor market definition, facts, and trends - Labor force, Unemployment - Industries and occupations: Adapting to change - The earnings of labor How the labor markets - Demand for labor - Supply for labor - The determination of wage Applications of the theory

3. Copyright © 2003 by Pearson Education, Inc.2-3 Figure 2.1 Labor Force Status of the U.S. Adult Civilian Population, June 2000

4. Copyright © 2003 by Pearson Education, Inc.2-4

5. Copyright © 2003 by Pearson Education, Inc.2-5 Figure 2.2 Unemployment Rates for the Civilian Labor Force, 1900–2000

6. Copyright © 2003 by Pearson Education, Inc.2-6 Figure 2.3 Employment Distribution by Major Industrial Sector, 1900–2000

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8. Copyright © 2003 by Pearson Education, Inc.2-8 Figure 2.4 Relationship between Wages, Earnings, Compensation, and Income

9. Copyright © 2003 by Pearson Education, Inc.2-9 Figure 2.5 The Markets in Which Firms Must Operate

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11. Copyright © 2003 by Pearson Education, Inc.2-11 Figure 2.6 Labor Demand Curve (based on data in Table 2.3)

12. Copyright © 2003 by Pearson Education, Inc.2-12 Figure 2.7 Shift in Demand for Labor Due to Increase in Product Demand

13. Copyright © 2003 by Pearson Education, Inc.2-13 Figure 2.8 Possible Shifts in Demand for Labor Due to Fall in Capital Prices

14. Copyright © 2003 by Pearson Education, Inc.2-14 Figure 2.9 Market Supply Curve for Secretaries

15. Copyright © 2003 by Pearson Education, Inc.2-15 Figure 2.10 Shift in Market Supply Curve for Secretaries as Salaries of Insurance Agents Rise

16. Copyright © 2003 by Pearson Education, Inc.2-16 Figure 2.11 Supply of Secretaries to a Firm at Alternative Market Wages

17. Copyright © 2003 by Pearson Education, Inc.2-17 Figure 2.12 Market Demand and Supply

18. Copyright © 2003 by Pearson Education, Inc.2-18 Figure 2.13 Demand and Supply at the “Market” and “Firm” Level

19. Copyright © 2003 by Pearson Education, Inc.2-19 Figure 2.14 New Labor Market Equilibrium after Demand Shifts Right

20. Copyright © 2003 by Pearson Education, Inc.2-20 Figure 2.15 New Labor Market Equilibrium after Supply Shifts Left

21. Copyright © 2003 by Pearson Education, Inc.2-21 Figure 2.16 New Labor Market Equilibrium after Supply Shifts Right

22. Copyright © 2003 by Pearson Education, Inc.2-22 Figure 2.17 Effects of an Above-Equilibrium Wage

23. Copyright © 2003 by Pearson Education, Inc.2-23 Figure 2.18 Effects of a Below-Equilibrium Wage

24. Copyright © 2003 by Pearson Education, Inc.2-24 Figure 2.19 Labor Supply to the Military: Different Preferences Imply Different “Rents”

25. Copyright © 2003 by Pearson Education, Inc.2-25