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Labour Economics

Labour Economics. Labour Resource. Land, LABOUR , capital, enterprise Direct demand – consumers “vote” Derived demand = depends on above “vote” Productivity – how much in a period of time MRPL  marginal product  extra production by addition of ONE unit of labour.

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Labour Economics

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  1. Labour Economics

  2. Labour Resource Land, LABOUR, capital, enterprise Direct demand – consumers “vote” Derived demand = depends on above “vote” Productivity – how much in a period of time MRPL  marginal product  extra production by addition of ONE unit of labour. See e.g. p 171 – 172 Market labour demand curve = quantity of labour demanded by all firms at each wage rate. ($, QDL)

  3. Curve Shift Factors Curve shows change in QDL as PL changes BUT shifts can happen too: • Change in the demand for the product of labour • Increase in QD of product  increase in QDL • Change in price of other input resources • Tech advances • Change in worker productivity • Increase MRPL and increase QDL

  4. Supply of Labour Market Labour Supply Curve shows number of people willing to offer their services at each wage rate. Opportunity cost of working = what else they could be doing (personal value system) Level of skill involved (doctor v n’paper) Geographic location & type of labour market Distasteful jobs, service jobs, etc

  5. Shifts in Supply Curve • Change in income tax rates • lower net wage = left shift • Change in composition of pop’n • # of people available (retirement) • Change in household technology • Better tech = more work time – rt shift • Change in attitude about work • e.g.Role of women (15% 46%) • Age restrictions (child labour) = left shift :::CU p 175

  6. Wage determination • Equilibrium agreement between HH and F • No shortage or surplus. [unreal] • Wage differentials – different labour markets • Non-monetary benefits, vacation time, benefits, working conditions

  7. Value of Skills EHSL - ELSL = Value of skills acquired

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