NOTE_Lecture_18_-_intro_to_the_labor_mar - Intro to the...

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1 Intro to the Labor Market Objectives The demand for labor Elasticity of demand for labor The supply of labor Factors that affect supply of labor Equilibrium in the labor market Competitive labor markets Imperfect labor markets The demand for labor Recall that the demand for a factor of production is the firm’s marginal revenue product curve (MRP). So the firm’s MRP curve for labor is the demand for labor. The MRP curve for labor slopes down and to the right When the price of labor (i.e., the wage) falls, the firm hires more labor; when the wage rises, less labor is hired Remember that the demand for labor is a derived demand, i.e., it is derived from the demand for the final product that the labor produces
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2 The demand for labor wage # of workers MRP of labor = Demand for labor Review of labor demand Factors that can shift demand for labor include: – Changes in demand for the final good (the good that the labor produces) – Changes in labor productivity – Changes in the prices of other inputs Substitute factors Complement factors Recall that productivity can affect the demand for a factor. Therefore,
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NOTE_Lecture_18_-_intro_to_the_labor_mar - Intro to the...

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