The Economics of Labor Markets. Chapter 18

Содержание

Слайд 2

Factors of Production

Factors of production are the inputs used to produce goods

Factors of Production Factors of production are the inputs used to produce goods and services.
and services.

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The Market for the Factors of Production

The demand for a factor of

The Market for the Factors of Production The demand for a factor
production is a derived demand.
A firm’s demand for a factor of production is derived from its decision to supply a good in another market.

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The Demand for Labor

Labor markets, like other markets in the economy, are

The Demand for Labor Labor markets, like other markets in the economy,
governed by the forces of supply and demand.

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The Versatility of Supply and Demand...

(a) The Market for Apples

(b) The Market

The Versatility of Supply and Demand... (a) The Market for Apples (b)
for Apple Pickers

Quantity of Apples

Quantity of Apple Pickers

Q

L

P

W

0

0

Price of Apples

Wage of Apple Pickers

Demand

Demand

Supply

Supply

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The Demand For Labor

Most labor services, rather than being final goods ready

The Demand For Labor Most labor services, rather than being final goods
to be enjoyed by consumers, are inputs into the production of other goods.

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The Production Function and The Marginal Product of Labor

The production function illustrates

The Production Function and The Marginal Product of Labor The production function
the relationship between the quantity of inputs used and the quantity of output of a good.

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How the Competitive Firm Decides How Much Labor to Hire

How the Competitive Firm Decides How Much Labor to Hire

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The Production Function...

0

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Quantity of Apple Pickers

Quantity of Apples

The Production Function... 0 50 100 150 200 250 300 350 0

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The Production Function and The Marginal Product of Labor

The marginal product of

The Production Function and The Marginal Product of Labor The marginal product
labor is the increase in the amount of output from an additional unit of labor.
MPL = ΔQ/ΔL
MPL = (Q2 – Q1)/(L2 – L1)

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Diminishing Marginal Product of Labor

As the number of workers increases, the marginal

Diminishing Marginal Product of Labor As the number of workers increases, the
product of labor declines.
As more and more workers are hired, each additional worker contributes less to production than the prior one.
The production function becomes flatter as the number of workers rises.

This property is called diminishing marginal product.

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The Production Function...

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Quantity of Apple Pickers

Quantity of Apples

The Production Function... 0 50 100 150 200 250 300 350 0

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The Value of the Marginal Product of Labor

The value of the marginal

The Value of the Marginal Product of Labor The value of the
product is the marginal product of the input multiplied by the market price of the output.
VMPL = MPL X P

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The Value of the Marginal Product of Labor

The value of the marginal

The Value of the Marginal Product of Labor The value of the
product is measured in dollars.
It diminishes as the number of workers rises because the market price of the good is constant.

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The Value of the Marginal Product and the Demand for Labor

To maximize

The Value of the Marginal Product and the Demand for Labor To
profit, the competitive, profit-maximizing firm hires workers up to the point where the value of marginal product of labor equals the wage.
VMPL = Wage

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The Value of the Marginal Product and the Demand for Labor

The value-of-marginal-product

The Value of the Marginal Product and the Demand for Labor The
curve is the labor demand curve for a competitive, profit-maximizing firm.

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The Value of the Marginal Product of Labor...

0

0

Value of marginal product

(demand curve

The Value of the Marginal Product of Labor... 0 0 Value of
for labor)

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Input Demand and Output Supply

When a competitive firm hires labor up to

Input Demand and Output Supply When a competitive firm hires labor up
the point at which the value of the marginal product equals the wage, it also produces up to the point at which the price equals the marginal cost.

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What Causes the Labor Demand Curve to Shift?

Output Price
Technological Change
Supply of Other

What Causes the Labor Demand Curve to Shift? Output Price Technological Change Supply of Other factors
factors

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The Labor Supply Curve

The labor supply curve reflects how workers’ decisions about

The Labor Supply Curve The labor supply curve reflects how workers’ decisions
the labor-leisure tradeoff respond to changes in opportunity cost.
An upward-sloping labor supply curve means that an increase in the wages induces workers to increase the quantity of labor they supply.

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The Labor Supply Curve

Supply

Wage (price of labor)

Quantity of Labor

0

The Labor Supply Curve Supply Wage (price of labor) Quantity of Labor 0

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What Causes the Labor Supply Curve to Shift?

Changes in Tastes
Changes in Alternative

What Causes the Labor Supply Curve to Shift? Changes in Tastes Changes in Alternative Opportunities Immigration
Opportunities
Immigration

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Equilibrium in the Labor Market

The wage adjusts to balance the supply and

Equilibrium in the Labor Market The wage adjusts to balance the supply
demand for labor.
The wage equals the value of the marginal product of labor.

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Equilibrium in the Labor Market...

Supply

Wage (price of labor)

Quantity of Labor

0

Demand

Equilibrium in the Labor Market... Supply Wage (price of labor) Quantity of Labor 0 Demand

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Equilibrium in the Labor Market

Labor supply and labor demand determine the equilibrium

Equilibrium in the Labor Market Labor supply and labor demand determine the
wage.
Shifts in the supply or demand curve for labor cause the equilibrium wage to change.

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A Shift in Labor Supply...

W1

0

L1

Supply, S1

Demand

A Shift in Labor Supply... W1 0 L1 Supply, S1 Demand

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A Shift in Labor Supply

An increase in the supply of labor :
Results

A Shift in Labor Supply An increase in the supply of labor
in a surplus of labor.
Puts downward pressure on wages.
Makes it profitable for firms to hire more workers.
Results in diminishing marginal product.
Lowers the value of the marginal product.
Gives a new equilibrium.

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A Shift in Labor Demand...

W1

0

L1

Supply

Demand, D1

A Shift in Labor Demand... W1 0 L1 Supply Demand, D1

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Shifts in Labor Demand

An increase in the demand for labor :
Makes it

Shifts in Labor Demand An increase in the demand for labor :
profitable for firms to hire more workers.
Puts upward pressure on wages.
Raises the value of the marginal product.
Gives a new equilibrium.

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Three Determinants of Productivity

Physical Capital
When workers work with a larger quantity of

Three Determinants of Productivity Physical Capital When workers work with a larger
equipment and structures, they produce more.
Human Capital
When workers are more educated, they produce more.
Technological Knowledge
When workers have access to more sophisticated technologies, they produce more.

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Productivity and Wage Growth in the United States

Productivity and Wage Growth in the United States

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Productivity and Wage Growth around the World

Productivity and Wage Growth around the World

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Other Factors of Production: Land and Capital

Capital refers to the stock of

Other Factors of Production: Land and Capital Capital refers to the stock
equipment and structures used for production.
The economy’s capital represents the accumulation of goods produced in the past that are being used in the present to produce new goods and services.

Слайд 34

Prices of Land and Capital

The purchase price is what a person pays

Prices of Land and Capital The purchase price is what a person
to own a factor of production indefinitely.
The rental price is what a person pays to use a factor of production for a limited period of time.

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Equilibrium in Markets for Land and Capital

The rental price of land and

Equilibrium in Markets for Land and Capital The rental price of land
the rental price of capital are determined by supply and demand.
The firm increases the quantity hired until the value of the factor’s marginal product equals the factor’s price.

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The Markets for Land and Capital...

Quantity of Land

Quantity of Capital

Q

Q

P

P

0

0

Rental Price of

The Markets for Land and Capital... Quantity of Land Quantity of Capital
Land

Rental Price of Capital

Demand

Demand

Supply

Supply

(a) The Market for Land

(b) The Market for Capital

Слайд 37

Equilibrium in Markets for Land and Capital

Each factor’s rental price must equal

Equilibrium in Markets for Land and Capital Each factor’s rental price must
the value of their marginal product.
They each earn the value of their marginal contribution to the production process.

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Linkages Among the Factors of Production

Factors of production are used together.
The marginal

Linkages Among the Factors of Production Factors of production are used together.
product of any one factor depends on the quantities of all factors that are available.

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Linkages Among the Factors of Production

A change in the supply of one

Linkages Among the Factors of Production A change in the supply of
factor alters the earnings of all the factors.

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Linkages Among the Factors of Production

A change in earnings of any factor

Linkages Among the Factors of Production A change in earnings of any
can be found by analyzing the impact of the event on the value of the marginal product of that factor.

Слайд 41

Summary

The three most important factors of production are labor, land, and capital.
The

Summary The three most important factors of production are labor, land, and
demand for factors, such as labor, is a derived demand that comes from firms that use the factors to produce goods and services.
Competitive, profit-maximizing firms hire each factor up to the point at which the value of the marginal product of the factor equals its price.

Слайд 42

Summary

The supply of labor arises from individuals’ tradeoff between work and leisure.
An

Summary The supply of labor arises from individuals’ tradeoff between work and
upward-sloping labor supply curve means that people respond to an increase in the wage by enjoying less leisure and working more hours.

Слайд 43

Summary

The price paid to each factor adjusts to balance the supply and

Summary The price paid to each factor adjusts to balance the supply
demand for that factor.
Because factor demand reflects the value of the marginal product of that factor, in equilibrium each factor is compensated according to its marginal contribution to the production of goods and services.

Слайд 44

Summary

Because factors of production are used together, the marginal product of any

Summary Because factors of production are used together, the marginal product of
one factor depends on the quantities of all factors that are available.
As a result, a change in the supply of one factor alters the equilibrium earnings of all the factors.

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The Versatility of Supply and Demand...

The Versatility of Supply and Demand...

Слайд 47

The Production Function...

The Production Function...

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The Value of the Marginal Product of Labor...

The Value of the Marginal Product of Labor...

Слайд 49

The Labor Supply Curve

The Labor Supply Curve

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Equilibrium in the Labor Market...

Equilibrium in the Labor Market...

Слайд 51

A Shift in Labor Supply...

A Shift in Labor Supply...

Слайд 52

A Shift in Labor Demand...

A Shift in Labor Demand...
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