Ch12_class - Principles of Microeconomics Econ 2005 Week 10...

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05/11/09 Econ 2005 1 Principles of Microeconomics Econ 2005 Week 10  Factor markets (ch 12)
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05/11/09 Econ 2005 2 Payoff to education How long to go to school and in what  profession: One more year of schooling increases  wage between 5-15% Market rewards for various jobs,  BLS data
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05/11/09 Econ 2005 3 College premium has increased over time Source: R. Murnane and F. Levy (2004)
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05/11/09 Econ 2005 4 Issues How wages are determined in a market  economy Demand for labor Supply of labor Rising inequality in the US Returns to education
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05/11/09 Econ 2005 5 What you will learn in this chapter: How factors of production—resources like land,  labor, and both  physical capital  and  human  capital —are traded in factor markets, determining  the  factor distribution of income How the demand for factors leads to the  marginal  productivity theory of income distribution Sources of  wage disparities  and the role of  discrimination The way in which a worker’s decision about  time  allocation  gives rise to  labor supply
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Econ 2005 6 The  factor distribution of income  is the  division of total income among labor, land, and  capital.  Factor prices, which are set in factor markets,  determine the  factor distribution of income.  Labor receives the bulk—more than 70 percent —of the income in the modern U.S. economy.  Although the exact share is not directly  measurable, much of what is called  compensation of employees is a return to  human capital. Factor Incomes and the Distribution of 
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Ch12_class - Principles of Microeconomics Econ 2005 Week 10...

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