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Chapter 2

Chapter 2. Overview of the Labor Market. Figure 2.5: The Markets in which Firms Must Operate. Important Definitions - Labor Markets. Labor Market Internal Labor Market Labor Force Out-of-Labor Force Labor Force Participation Rate Unemployment Rate

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Chapter 2

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  1. Chapter 2 Overview of the Labor Market

  2. Figure 2.5: The Markets in which Firms Must Operate

  3. ImportantDefinitions - Labor Markets • Labor Market • Internal Labor Market • Labor Force • Out-of-Labor Force • Labor Force Participation Rate • Unemployment Rate • Primary, Secondary, and Tertiary Sectors • Pareto Efficiency

  4. Figure 2.1: Labor Force Status of the U.S. Adult Civilian Population, April 2007

  5. Table 2.1: Labor Force Participation Rates by Gender, 1950-2007

  6. Figure 2.2: Unemployment Rates for the Civilian Labor Force, 1946-2006(detailed data in table on next slide)

  7. Unemployment Rates for the Civilian Labor Force, 1946-2006(Data displayed Graphically in Figure 2.2)

  8. Figure 2.3: Employment Distribution by Major Nonfarm Sector, 1954-2007(detailed data in table on next slide)

  9. Employment Distribution by Major Nonfarm Sector, 1954-2007 (data displayed graphically in Figure 2.3)

  10. Important Definitions - Earnings of Labor • Nominal Wages • Real Wages • Consumer Price Index • Earnings • Payments In Kind • Deferred Payments • Total Compensation • Income

  11. Table 2.2: Nominal and Real Hourly Earnings, U.S. Nonsupervisory Workers in the Private Sector, 1980-2006

  12. Figure 2.4: Relationship between Wages, Earnings, Compensation and Income

  13. Important Definitions - The Demand for Labor • Substitution Effect • Scale Effect • Change In Demand • Change in Quantity Demanded • Market, Industry, and Firm Labor Demand • Long Run vs. Short Run Labor Demand

  14. Table 2.3: Labor Demand Schedule for a Hypothetical Industry

  15. Figure 2.6: Labor Demand Curve (based on Table 2.3)

  16. Figure 2.7: Shift in Demand for Labor Due to Increase in Product Demand

  17. Figure 2.8: Possible Shifts in Demand for Labor Due to Fall in Capital Prices

  18. Important Definitions - The Supply of Labor • Change in Quantity Supplied • Change in Supply • Comparable vs. Noncomparable Jobs • Market Supply of Labor • Supply of Labor to the Firm • Wage Taker

  19. Figure 2.9: Market Supply Curve for Paralegals

  20. Figure 2.10: Shift in Market SupplyCurve for Paralegals as Salaries of Insurance Agents Rise

  21. Figure 2.11: Supply of Paralegals to a Firm at Alternative Market Wages

  22. Important Definitions - Wage Determination • Equilibrium or Market Clearing Wage • Disequilibrium • Excess Demand and Excess Supply • Nonmarket Influences on the Labor Market • Collective Bargaining Agreement • Economic Rent • Reservation Wage

  23. Figure 2.12: Market Demand and Supply

  24. Figure 2.13: Demand and Supply at the “Market” and “Firm” Levels

  25. Figure 2.14: New Labor Market Equilibrium after Demand Shifts Right

  26. Figure 2.15: New Labor Market Equilibrium after Supply Shifts Left

  27. Figure 2.16: New Labor Market Equilibrium after Supply Shifts Right

  28. Figure 2.17: Effects of an Above-Market Wage

  29. Figure 2.18: Effects of a Below-Equilibrium Wage

  30. Figure 2.19: Labor Supply to the Military: Different Preferences ImplyDifferent “Rents”

  31. Table 2.4: Unemployment and Long-Term Unemployment, Selected European and North American Countries, 2005

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