11labor markets w voice-over

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Chapter 11 Labor Markets:

1 Chapter 11 Labor Markets

Three Types of Markets:

2 Three Types of Markets Product (Services) Market Loanable Funds Market Resource Market (labor)

The Labor Market under Perfect Competition:

3 The Labor Market under Perfect Competition Depends on the competitive nature of the market The intersection of the demand and supply of labor

Slide 4:

4 D S Market Supply and Demand Wages Quantity of Labor

The Demand for Labor:

5 The Demand for Labor The different quantities of labor employers are willing to hire at different wage rates in a given time period,

Slide 6:

6 Marginal Revenue Product Exhibit 1 Demand Curve for Labor Exhibit 2

Slide 7:

7 $280 $210 $140 $70 1 2 3 4 Demand Curve for Labor MRP = demand $350 5 Q

Derived Demand:

8 Derived Demand Potato Chips : Potatoes Cars : Auto Workers

Slide 9:

9 $280 $210 $140 $70 10 20 30 40 Supply Curve of Labor $350 50 S Quantity of Labor Wage Rate per day

Human Capital:

10 Human Capital Education, training, experience, and health that enables a worker to enter an occupation and be productive

The Equilibrium Wage Rate:

11 The Equilibrium Wage Rate The interaction of demanders (employers) and suppliers (workers)

Slide 12:

12 $280 $210 $140 $70 10 20 30 40 Competitive Labor Market $350 50 S D E Quantity of Labor Wage Rate per day

Slide 13:

13 $280 $210 $140 $70 1 2 3 4 Competitive Labor Market $350 5 S D E Quantity of Labor Wage Rate per day

Labor Unions:

14 Labor Unions The perfectly competitive model does not apply to workers in unions

Examples of Unions:

15 Examples of Unions Teamsters United Auto Workers National Education Assoc. American Federation of Government Employees

How unions attempt to raise wages:

16 How unions attempt to raise wages Increase demand for labor Decrease supply for labor Collective Bargaining - Power

Slide 17:

17 $280 $210 $140 $70 10 20 30 40 Unions cause an increase in the demand for labor $350 50 S D 2 E 1 D 1 E 2 Quantity of Labor Wage Rate per day

Slide 18:

18 $350 $280 $210 $140 10 20 30 40 Unions cause a decrease in the supply for labor $420 50 S 2 D 1 E 1 E 2 Quantity of Labor Wage Rate per day S 1

Slide 19:

19 $280 $210 $140 $70 10 20 30 40 Collective Bargaining causes a Wage Rate increase $350 50 D Unemployment Wage Rate per day S Quantity of Labor

Union Membership around the World:

20 Union Membership around the World Union power has declined Exhibits 9 & 10

Employer Power:

21 Employer Power Monopsony – an extreme case of a single firm hiring in a particular market

END:

22 END