Post on 13-Dec-2015
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Chapter 2
Overview of The Labor Market
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Labor Force Status of the U.S. Adult Population, 1994Figure 2.1
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Unemployment Rate = Unemployed/Labor Force
Labor Force Participation Rate = Labor Force/Population
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Unemployment Rates for the Civilian Labor Force, 1900-1994Figure 2.2
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Employment Distribution by Major Industrial Sector, 1990-1997Figure 2.3
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Relationship between Wages, Earnings, Compensations, and Income
Figure 2.4
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The Markets in Which Firms Must OperateFigure 2.5
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LABOR DEMAND
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Labor Demand Curve (based on data in Table 2.3)Figure 2.6
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Shift in Demand for Labor Due to Increase in Product DemandFigure 2.7
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Shifters of Demand
• Product Demand
• Prices of Substitutes and Complements
• Expectations
• Not Wages!!
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Wages Rise/Employment Falls
• Scale Effect – Costs rise– Prices rise– Sell less of the product– Need fewer workers
• Substitution Effect– Switch to capital– Need fewer workers
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Possible Shifts in Demand for Labor Due to Fall in Capital PricesFigure 2.8
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Different Labor Markets
• Market – demand for attorneys
• Industry – university demand for law professors
• Firm – U of A demand for law profs.
• These are all affected by wages differently
• These all affect wages differently
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LABOR SUPPLY
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Market Supply Curve for SecretariesFigure 2.9
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Shifters of Supply
• Wages in other professions
• Economy
• Population
• Costs/barriers such as education
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Shift in Market Supply Curve for Secretaries As Salaries of Insurance Agents Rise
Figure 2.10
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Supply of Secretaries to a Firm at Alternative Market Wages(More Elastic)
Figure 2.11
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Market Demand and SupplyFigure 2.12
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Demand and Supply at the “Market” and “Firm” LevelFigure 2.13
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New Labor Market Equilibrium After Demand Shifts RightFigure 2.14
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New Labor Market Equilibrium After Supply Shifts LeftFigure 2.15
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New Labor Market Equilibrium After Supply Shifts RightFigure 2.16
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New Labor Market Equilibrium After Supply and Demand Shift Left
Figure 2.17
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Effects on Labor Market Equilibrium of Industrywide UnionsFigure 2.18
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How Unions That Control Supply of Labor to a Market AffectLabor Market Equilibrium
Figure 2.19