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Overview of the Labor Market

Overview of the Labor Market. Labor: input into production of goods and services Labor market: Buyers and sellers of labor Buyers (demand side) 7 million firms Sellers (supply side) 150 million 142 million employees. Unique features of labor market.

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Overview of the Labor Market

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  1. Overview of the Labor Market Labor: input into production of goods and services Labor market: Buyers and sellers of labor Buyers (demand side) 7 million firms Sellers (supply side) 150 million 142 million employees

  2. Unique features of labor market • Can’t buy or sell people, rent services • People care, with whom they work • Long-term attachments • No explicit contract • Markets clear slowly • Market definitions • Geography • Skill-occupation • industry

  3. Market clearing How do we assign 142 million people to 7 million employers?

  4. Wages • Common signal to supply-side and demand side • Demand-side: input price • Supply-side: source of purchasing power Real wage: purchasing power of wage = wage in current $/price level

  5. Wages are 72% of total compensation Meisenheimer , Joseph R. “Real compensation, 1979 to 2003: analysis from several data.sources.” Monthly Labor Review 128 (May 2005): 3-22

  6. Benefits have risen faster than wages—due largely to cost of maintaining health insurance Meisenheimer , Joseph R. “Real compensation, 1979 to 2003: analysis from several data.sources.” Monthly Labor Review 128 (May 2005): 3-22

  7. Overview of the Labor Market Labor market: Demand-side: firms Supply side: labor force Common signal: Wage Aim: allocate workers to firms

  8. Application : Baby-boom and the labor market Sincavage, Jessica R. “The labor force and unemployment: three generations of change” Monthly Labor Review 128 (June 2004): 34-41.

  9. http://www.census.gov/ipc/prod/97agewc.pdf

  10. http://www.census.gov/ipc/prod/97agewc.pdf

  11. http://www.census.gov/ipc/prod/97agewc.pdf

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