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