Lecture 7 - Welfare WelfareImplications Who Wholoseswhat Q:...

Info icon This preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Welfare Implications
Image of page 1

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

View Full Document Right Arrow Icon
Who loses what? Q: What is the pareto optimal level of employment? Q: What is the DWL associated with monopsony? Q Wh i h i f h d l ? Q: What is the size of the producer surplus? Q: What is the size of the consumer surplus?
Image of page 2
Welfare and Monopsony Under Wage Taker: Producer surplus = B + C , Worker Surplus = A +D +E , No DWL Under Monopsony: Producer surplus = B + A , Worker Surplus = E , DWL= C+D Firms take A from workers and society loses C+D but firms prefer monopsony since A>C Firms take A from workers, and society loses C+D, but firms prefer monopsony since A>C. (this is socially inefficient)
Image of page 3

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

View Full Document Right Arrow Icon
Lecture 7 Employer Side Frictions 4
Image of page 4
Roadmap Training Training and incentives Q i i d C Quasi Fixed Costs Hiring Costs 5
Image of page 5

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

View Full Document Right Arrow Icon
Training Q: As an employer, why would you train? What ki d f i i ld id ? Wh kind of training would you provide? Why might you not train? 6
Image of page 6