Women , Men , & Work

33
Women, Men, & Work Professor Karen Leppel

description

Women , Men , & Work. Professor Karen Leppel. Introduction and Overview of Supply & Demand in the Labor Market. Economics : The study of the allocation of scarce resources. - PowerPoint PPT Presentation

Transcript of Women , Men , & Work

Page 1: Women ,  Men ,  &  Work

Women, Men, & Work

Professor Karen Leppel

Page 2: Women ,  Men ,  &  Work

Introduction and Overview of Supply & Demand in the Labor Market

Page 3: Women ,  Men ,  &  Work

Economics: The study of the allocation

of scarce resources.

Page 4: Women ,  Men ,  &  Work

Because resources are scarce, people need to make choices. You need to decide between alternatives, because you can not do everything. To do option A, you have to give up the opportunity to do option B. So, option B is the opportunity cost of option A.

Page 5: Women ,  Men ,  &  Work

As you discovered in Microeconomics, the theory of supply and demand underlies much of economics. We, therefore, will review briefly here the basics of supply and demand analysis.

Page 6: Women ,  Men ,  &  Work

Law of Demand

There is a negative relation between the price of a item and the amount of the item that buyers are willing to purchase.

Page 7: Women ,  Men ,  &  Work

Law of Supply

There is a positive relation between the price of a item and the amount of the item that suppliers are willing to provide.

Page 8: Women ,  Men ,  &  Work

The laws of demand and supply can also be applied to the labor market.

Page 9: Women ,  Men ,  &  Work

Demand side:

The higher the price of labor or wage for a job, the less labor firms will want to hire.

Page 10: Women ,  Men ,  &  Work

Three Reasons for Negative Relation between the Wage and the Quantity Demanded of

Labor

1. Diminishing Marginal Productivity

Additional units of labor provide progressively less additional output when combined with given amounts of capital (plant & equipment). So employers are only willing to hire additional labor at lower and lower wages.

Page 11: Women ,  Men ,  &  Work

Three Reasons for Negative Relation between the Wage and the Quantity Demanded of

Labor

2. Substitution Effect

When the price of an input changes, while the price of a substitute input remains the same, profit-maximizing employers will tend to use more of the one that is now relatively cheaper and less of the one that is now relatively more expensive.

Page 12: Women ,  Men ,  &  Work

Three Reasons for Negative Relation between the Wage and the Quantity Demanded of

Labor

3. Scale Effect

As wages increase, the price of the product increases, and less of it is purchased. So, fewer workers are needed to produce the product.

Page 13: Women ,  Men ,  &  Work

So the demand curve slopes downward.

Page 14: Women ,  Men ,  &  Work

wage

Quantity of labor

Demand

Page 15: Women ,  Men ,  &  Work

Supply side:

The higher the price of labor or wage for a job, the greater the number of workers who are willing to work in the job.

Page 16: Women ,  Men ,  &  Work

So the supply curve slopes upward.

Page 17: Women ,  Men ,  &  Work

wage

Quantity of labor

Supply

Page 18: Women ,  Men ,  &  Work

This positive relation applies to the number of individuals available for a job, but not necessarily to the number of hours worked by a particular individual.

We’ll discuss this in more detail later in the course.

Page 19: Women ,  Men ,  &  Work

Equilibrium means that there is no tendency for things to change. The system is in balance.

When the quantity demanded is equal to the quantity supplied, we have equilibrium.

Page 20: Women ,  Men ,  &  Work

wage

Quantity of labor

Supply

Demand

equilibrium

Equilibrium occurs at the intersection of the supply and demand curves.

Page 21: Women ,  Men ,  &  Work

wage

Quantity of labor

Supply

Demand

equilibrium quantity

The equilibrium quantity can be read from the horizontal axis.

equilibrium

Page 22: Women ,  Men ,  &  Work

wage

Quantity of labor

Supply

Demand

equilibrium quantity

equilibrium wage

The equilibrium wage can be read from the vertical axis.

equilibrium

Page 23: Women ,  Men ,  &  Work

Recall the distinctions betweena change in demand

and a change in quantity demanded,

and betweena change in supply

and a change in quantity supplied.

Page 24: Women ,  Men ,  &  Work

Change in Quantity Demanded

• a movement along a particular demand curve

• the result of a change in the price of the item in question.

For example, the quantity demanded of accountants will decrease if there is an increase in the wage of accountants.

Page 25: Women ,  Men ,  &  Work

wage

quantity of accountants

3020

450 500

Demand

If the wage increases from $20 to $30, quantity demanded decreases from 500 to 450.

Page 26: Women ,  Men ,  &  Work

The demand curve does not shift when the price of an item changes! We simply move from one point on the curve to another point on the same curve.

Page 27: Women ,  Men ,  &  Work

Change in Demand

• a shift of the entire demand curve

• happens when there is a change in something

other than the price of the item in question.

Page 28: Women ,  Men ,  &  Work

wage

quantity of accountants

Demand

For example, the demand for accountants will increase if new laws make preparing your own taxes more complicated.

New Demand

Page 29: Women ,  Men ,  &  Work

Change in Quantity Supplied

• a movement along a particular supply curve

• the result of a change in the price of the item in question.

For example, the quantity supplied of accountants will increase if there is an increase in the wage of accountants.

Page 30: Women ,  Men ,  &  Work

wage

quantity of accountants

3020

475 500 525 550 575 600 625

Supply

If the wage increases from $20 to $30, quantity supplied increases from 575 to 600.

Page 31: Women ,  Men ,  &  Work

The supply curve does not shift when the price of an item changes! We simply move from one point on the curve to another point on the same curve.

Page 32: Women ,  Men ,  &  Work

Change in Supply

• a shift of the entire supply curve

• happens when there is a change in something other than the price of the item in question.

Page 33: Women ,  Men ,  &  Work

wage

quantity of accountants

SupplyNew Supply

For example, if low cost government training programs make it easier to get trained as an accountant, the supply of accountants would be expected to increase.