labor-markets

labor-markets - Labor Markets Sandeep Bhaskar Temple...

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Labor Markets Sandeep Bhaskar Temple University Sandeep Bhaskar (Temple University) Labor Markets 1 / 27
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Outline 1 Introduction 2 Labor Productivity 3 Labor Markets 4 Unemployment Sandeep Bhaskar (Temple University) Labor Markets 2 / 27
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Introduction Introduction Output or GDP depends on the inputs, which we call factors of production . Labor is the only factor that can be changed in the short-run . Therefore, output changes in the short-run are primarily dependent on changes in the quantity of labor used. We will study this aspect in the present section. Sandeep Bhaskar (Temple University) Labor Markets 3 / 27
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Introduction Short-Run vs. Long-Run Short-run is the time period in which at least one factor of production is fixed. It may be 1 day or 1 year or any other time period. Long-run is the time period in which all factors of production can be varied. It is usually a period greater than few months. Sandeep Bhaskar (Temple University) Labor Markets 4 / 27
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Introduction Labor-Leisure Tradeoff We gain higher utility from leisure. But, higher leisure implies lower labor. And, lower labor in turn implies lower output. Therefore, we have to decide how much labor we want and be prepared to give up some output for that. Sandeep Bhaskar (Temple University) Labor Markets 5 / 27
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Labor Productivity Leisure-Output Tradeoff More leisure Less output. Less leisure More output. The relation is not one-to-one. We end up with a graph like a production function. Sandeep Bhaskar (Temple University) Labor Markets 6 / 27
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Labor Productivity Labor-Output Tradeoff More labor More output. Less labor Less output. The relation again is not one-to-one. We end up with a graph that starts at the origin and slopes up at a decreasing rate. Sandeep Bhaskar (Temple University) Labor Markets 7 / 27
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Labor Productivity Productivity of Labor Productivity of labor is the amount of output that each additional hour of labor generates. It is given by the slope of the labor-production function.
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This note was uploaded on 05/04/2011 for the course ECON 1101 taught by Professor Rappoport during the Fall '08 term at Temple.

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labor-markets - Labor Markets Sandeep Bhaskar Temple...

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