Lecture 6 2-2- 2012 - Economics 151 lecture 2-2-2012 Labor...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Economics 151 lecture 2-2-2012 Labor Demand Elasticities I will discuss first own-wage elasticity, then cross-wage elasticity and finally, labor demand and technological change. Most of the discussion follows ch. 4 of the textbook. I. Own-wage elasticity A. Many labor demand elasticities A downward-sloping LD schedule generally is neither elastic nor inelastic. Instead, at different wage levels, LD schedule has ranges that are more or less elastic. --Elasticity depends on both the slope of the demand curve and its position. So for any given labor demand schedule, there are many (an infinite number of) labor demand elasticities. This is very important for empirical work. --Generally, when elasticity is less than (more than) 1, we say demand is inelastic (elastic). A unitary elasticity (= 1) defines the point at which the wage bill stays constant when wages increase. 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Marshall’s four conditions for a high own-wage elasticity of labor demand. (In the text, these are the Hicks- Marshall laws of derived demand.) 1. When the price elasticity of demand for the product is high. If u raise the wage, cost cant give to customers Sales decrease Lay off workers 2. When there is high substitutability with other inputs. 3. When the elasticity of supply of other inputs is high. 4. When labor costs are high as a share of production costs. - go to concert : the guy guide u to seat is small portion of cost. When they form union and want higher wage, still small cost, so it okay. 2
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/21/2012 for the course ECON 151 taught by Professor Staff during the Spring '08 term at University of California, Berkeley.

Page1 / 7

Lecture 6 2-2- 2012 - Economics 151 lecture 2-2-2012 Labor...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online