Chapter18

Chapter18 - Ch 18: Wages and Unemployment Understanding the...

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1 Ch 18: Wages and Unemployment Understanding the labor market is key to understanding the macroeconomy. In this section, we will discuss: -Some important trends in labor markets -Use supply and demand to understand the labor market -Talk about measures of the state of the labor market.
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2 I. Five Important Labor Market Trends Trends in Real Wages
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3
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4 Average constant-dollar wages of full-time males, age 22 - 65 by educational group, 2002 dollars 20,000 40,000 60,000 80,000 100,000 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 PC CG SC HSG HSD
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5 Trends in Employment and Unemployment
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6 4 6 8 10 12 1980 1990 2000 2010 Year france us Unemployment Rate Trends in France vs. US
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7 II. Supply and Demand in the Labor Market A. Labor Demand Curve Why does a company hire workers even thought it must pay them? Because it expects to receive more in extra revenue than it must pay.
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8 Example # of workers # of goods produced Marginal Product Value of MP (P = $5) 00 1 3 03 01 5 0 2 5 52 51 2 5 3 7 52 01 0 0 4 9 01
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9 To maximize profits, the firm should hire workers up to the point where:
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10 In fact, the demand curve is defined implicitly by:
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11 B. Shifts in the Demand for Labor
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12 B. Shifts in the Demand for Labor (cont.)
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This note was uploaded on 10/24/2011 for the course ECON 3 taught by Professor Peters during the Spring '07 term at UCSD.

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Chapter18 - Ch 18: Wages and Unemployment Understanding the...

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