ECON 201 - Compensating differential- differences in wages...

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20:19 How many workers will the firm hire? Rule: Hire Until:  VMP L =Wage or  D L =S L Corollary: If VMP>Wage then HIRE        If VMP < wage then Fire How did the industry wage get determined? Industry demand and supply: Industry demand: add all firm’s demand curves together horizontally…. 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 wages in an industry to increase Increase (shift) in demand for labor Output price increase Increase in worker productivity Decrease in supply Restrict entry into industry Restrict immigration Why does the wage differential exist? Job characteristics (Danger level, etc)
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Unformatted text preview: Compensating differential- differences in wages arising to offset the nonmonetary characteristics of the job Human Capital Future Labor Market Job churning +/- 30 million jobs per year 6 different jobs in 10 years after college Supply shift- demographic bulge Fastest growing occupations Biomedical engineering Network systems analyst Home health aide Home care aide Financial examiner Hitches in the Labor Market Government A government imposed binding minimum wage Labor Unions Cartel among laborers in labor, not product market Such collusion illegal under Sherman Anti-trust Law Clayton Act 1914- specifically exempted labor unions from antitrust Two basic forms of Unions Craft Unions- restrict supply...
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ECON 201 - Compensating differential- differences in wages...

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