Lec_18_labor_mkts - Chapter 13: Labor Markets, Poverty, and...

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1 • Second exam will cover only Chapters 10- 12 • Final exam will be cumulative for entire course • Answers to practice second exam will be reviewed in discussion sections week of Wed Feb 18 to Mon Feb 23 Chapter 13: Labor Markets, Poverty, and Income Distribution A. Demand for labor B. Firm versus industry labor demand C. Supply of labor • Labor supply curve for individual firm: if one of many similar potential employers, won’t get anyone if pay less than other firms, more than can use if pay more • Labor supply curve for entire industry: need to increase wage to attract people away from other industries Labor market for Joe’s Muffler Shop Labor market for entire industry $ per worker $ per worker Number of workers Number of workers labor demand (entire industry) labor supply (entire industry) $150/ day 3,000 $150/ day labor supply (Joe’s shop) labor demand (Joe’s shop) 2 Labor supply curve for one industry: raise wage in this industry, holding wages in other industries constant Labor supply for entire economy: raise wage in all jobs, what would happen to number of people who want jobs? Substitution effect One possibility: some people are attracted into labor force who wouldn’t otherwise want to work In this case, economy-wide labor supply curve would slope up wage number of workers economy- wide labor supply
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2 Income effect Another possibility: if one member of couple earns more money, the other might feel he or she doesn’t need to work (or each
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This note was uploaded on 09/17/2009 for the course ECON ECON 2 taught by Professor Hamilton during the Spring '09 term at UCSD.

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Lec_18_labor_mkts - Chapter 13: Labor Markets, Poverty, and...

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