1 / 9

Understanding Labor Markets: Equilibrium, Factors, and Imperfect Competition

Discover how labor supply is affected by wages, hours of work, and market conditions. Learn about equilibrium in competitive and imperfectly competitive labor markets, analyzing the impact of factors like income effects and shifts in labor supply curves. Explore concepts of monopsony power and wage determination in imperfectly competitive markets.

savagep
Download Presentation

Understanding Labor Markets: Equilibrium, Factors, and Imperfect Competition

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Module Micro: Econ: 35 71 The Market for Labor • KRUGMAN'S • MICROECONOMICS for AP* Margaret Ray and David Anderson

  2. What you will learnin thisModule: • The way in which a worker’s decision about time preference gives rise to labor supply. • How to find equilibrium in the perfectly competitive labor market. • How equilibrium in the labor market is determined if either the product, or the factor, market is not perfectly competitive.

  3. The Supply of labor • Work versus leisure • Wages and labor supply

  4. Hourly wage Labor supply IE>SE, downward sloping SE>IE, upward sloping Hours of work (week) The Supply of labor • Substitution effect • Income effect

  5. Shifts of the Labor Supply Curve • Changes in preferences and social norms • Changes in population • Changes in opportunities • Changes in wealth

  6. Wage Market Labor Supply Equilibrium in the Labor Market W* Market Labor Demand • Up to this point we have assumed that both the product and labor markets are perfectly competitive • There are differences when either the product market or labor market is not perfectly competitive Quantity of Labor (workers) E*

  7. Imperfect Competition in the Product Market W* VMPL MRPL • Recall that MR < P with imperfect competition. That means the value of the marginal product = MP x MR. • With imperfect competition the value of the marginal product is called marginal revenue product (MRP). MRP = MP x MR Wage Em Ec Quantity of Labor (workers)

  8. Imperfect Competition in the Labor Market MFCL Labor Supply $12 $10 • A monoposony is a single buyer of a factor of production. • With imperfect competition in a factor market, MFC > W Wage 3 Quantity of Labor (workers)

  9. Equilibrium with Imperfect Competition MFCL Labor Supply W* • Monopsony power allows firms to pay a wage below MRP MRPL Wage MRP E* Quantity of Labor (workers)

More Related