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Higher equilibrium wage - PowerPoint PPT Presentation

Introduction to Labor Economics

Introduction to Labor Economics. Chapter 2 - The Labor Market. National and local labor markets. national labor market. National and local labor markets. national labor market local labor market. Internal labor market. A firm uses an internal labor market if:

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Backward Bending Labor Supply

So far assumed that L(S) and L(D) curves cross at a wage at which the L(S) curve slopes upward. At high wages, income effect may dominate, L(S) curve may bend backward. What if L(S) curve bends backward when it crosses the L(D) curve? Backward Bending Labor Supply Wage Wage L(S) L(D) L

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1.9k views • 29 slides

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Higher equilibrium wage - PowerPoint PPT Presentation

Introduction to Labor Economics

Backward Bending Labor Supply