SingleLabourMarket - Labour Market Equilibrium Laura...

Info icon This preview shows pages 1–10. Sign up to view the full content.

View Full Document Right Arrow Icon
Labour Market Equilibrium Laura Salisbury ECON 3240: Labour Economics Fall 2016 Laura Salisbury (ECON 3240) Labour Market Equilibrium Fall 2016 1 / 30
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Competitive Markets Product market and labour market perfectly competitive Firms: Firm “small” relative to size of both markets Firm a price-taker in both product and labour markets Workers: Each worker is “small” relative to size of both markets Workers are price-takers in product and labour markets Equilibrium wage: labour demanded = labour supplied. Laura Salisbury (ECON 3240) Labour Market Equilibrium Fall 2016 2 / 30
Image of page 2
Market Demand for Labour Labour market comprised of individual firms Market labour demand curve: horizontal sum of individual firms’ labour demand curves Example: Suppose market consists of 2 firms When w = 2, firm 1 demands 2 units of labour and firm 2 demands 3 units of labour Market demand for labour when w = 2 is 5 units of labour. Laura Salisbury (ECON 3240) Labour Market Equilibrium Fall 2016 3 / 30
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Market Labour Demand Curve Laura Salisbury (ECON 3240) Labour Market Equilibrium Fall 2016 4 / 30
Image of page 4
Market Labour Demand Curve Laura Salisbury (ECON 3240) Labour Market Equilibrium Fall 2016 5 / 30
Image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Market Supply of Labour Each individual worker has a labour supply curve Market labour supply curve is horizontal sum of individual supply curves Example: Suppose market consists of two workers. When w = 2, worker 1 is willing to supply 10 units of labour and worker 2 is willing to supply 5 units of labour. Market supply of labour when w = 2 is 15 units. Laura Salisbury (ECON 3240) Labour Market Equilibrium Fall 2016 6 / 30
Image of page 6
Labour Supply Curve Faced by Individual Firm Perfect competition: firms face perfectly elastic (horizontal) labour supply curve Firm is so small relative to market, it can hire as much or as little labour as wants to at the market wage. Short run: Firm might have to increase wages to attract more labour Dynamic Monopsony Long run: If firm raises wages above market wage to attract more labour, it will experience an influx of workers, which will drive wage back to market wage. Laura Salisbury (ECON 3240) Labour Market Equilibrium Fall 2016 7 / 30
Image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Labour Supply Curve Faced by Individual Firm Laura Salisbury (ECON 3240) Labour Market Equilibrium Fall 2016 8 / 30
Image of page 8
Monopoly in Product Market If firm is monopoly, then it is the only firm in its industry. Recall: firm’s short-run profit-maximization condition: w = MRP OR w = MP N × MR Q What is MR Q ?
Image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 10
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern