4.14.10 – Lecture Notes, ECON 201

4.14.10 – Lecture Notes, ECON 201 - 4.14.10...

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4.14.10 – Lecture Notes, ECON 201 THE FIRM’S DEMAND FOR LABOR - Combine 1 and 2 and get: o The value of the marginal product of labor (VMPL) = (MPL) x (Price of output) HOW DID THE INDISTRU WAGE GET DETERMINED? - Industry Demand and Supply - Industry demand: o Add all firms demand curve together horizontally o Yields how many workers the industry would demand at each wage INDUSTRY SUPPLY? - How many workers willing to work in that industry at each wage? - Upward sloping supply curve SHIFTS IN DEMAND AND SUPPLY OF LABOR? - Yields insights into what might cause mages in an industry to increase - Increase (Shift) in demand for labor: o Output price increase o Increase in worker productivity WAGE DIFFERENCY BY INDUSTRY - Two Labor Markets o Fast Foods o Surgeons WHY DOES THE WAGE DIFFERENTIAL EXIST? - Job Characteristics o Compensating Differential o Definition: Difference sin wages arising to offset the nonmonetary characteristics of the job - Human Capital o Investment in People o Skill differential widening
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4.14.10 – Lecture Notes, ECON 201 - 4.14.10...

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