The rms demand for labour is determined by labour

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Unformatted text preview: hange in profit from hiring an addiConal unit of labour is: How much labour does the firm hire? The firm’s demand for labour is determined by: Labour supply: Basic terminology: 1.  AcCve populaCon (APt): size of the populaCon of working age. 2.  Labour force (Lt): number of persons of working age who would like to work. Can be view as: where πt is the parCcipaCon rate. 3.  Employment (Et): is the number of persons having a job. 4.  The number of unemployed (Ut) is then simply: 5. The unemployment rate is: 70 12 68 10 66 64 8 62 60 6 58 4 56 54 2 52 50 0 Discourage ParCcipaCon rate Employment rate Greece: parCcipaCon rate (%), employment rate (%) and discourage workers (‘000). Source: OECD.Stat Labour supply curve Equilibrium in the labour market With perfectly flexible money wages, the classical labour market implies a verCcal aggregate supply curve: 2. Labour market equilibrium and involuntary unemployment In this se...
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