FILE: 251N11.HTML
CLASS NOTES
FOR ECONOMICS 251
DR. WILLIAM
SHINGLETON
FALL 2005
TUESDAY: REGULATION/FROM LAST WEEK’S NOTES
NOV08 RESOURCE
MARKETS CH 30
LABOR
MARKETS CH
31
INTRODUCTION TO
FACTOR MARKETS MRP = MFC
DEFINE FACTOR OF PRODUCTION
MARGINAL REVENUE PRODUCT
MARGINAL FACTOR COST
COMPETITIVE
FACTOR MARKETS
PRICE TAKERS ALL AROUND
A MATTER OF SUPPLY AND DEMAND
DEMAND
DERIVED DEMAND
MARGINAL PHYSICAL PRODUCT
DOLLARS AND CENTS COUNT
MARGINAL REVENUE PRODUCT
ATHLETIC STARS, SALARIES, AND
SPORTSWRITERS
PRICE TAKING OUTPUT MARKET
PRICE SETTING OUTPUT MARKET
SUPPLY
MARGINAL FACTOR COST
PRICE TAKING FACTOR MARKET
PRICE SETTING FACTOR MARKET
LABOR MARKETS
DERIVED DEMAND FOR LABOR
WHY HAVE BOTH WAGES AND JOBS INCREASED? (USE SUPPLY AND DEMAND)
SIMULTANEOUS INCREASES
DEMAND GROWING FASTER THAN SUPPLY
TOTAL RESOURCE INCOME = P*Q
LONG RUN LABOR SUPPLY
LABOR FORCE PARTICIPATION RATE (LFPR)
SHORT RUN LABOR
SUPPLY
OVERTIME WAGES
SUBSTITUTION EFFECT
INCOME EFFECT
LABOR/LEISURE TRADEOFF
WAGE DETERMINES ANGLE
EFFECTS OF WAGE INCREASE VS OVERTIME
PAY
BACKWARD BENDING SUPPLY OF
LABOR POSSIBLE
WEALTH
SUBSTITUTION EFFECT =>
MORE HOURS WORKED
INCOME EFFECT => FEWER
HOURS WORKED
NET EFFECT => UNCERTAIN ON
HOURS WORKED
NET EFFECT => WORKERS
BETTER OFF
LOGIC FOR OVERTIME PAY
ONLY COST INCREASE IS FOR
INCREASED LABOR
LESS-COMPETITIVE
MARKETS MRP = MLC
PRICE SETTERS
MARGINAL FACTOR COST
MINIMUM WAGES AND COMPANY TOWNS
REVIEW MINIMUM WAGE /
COMPETITIVE MARKET
MINIMUM WAGE = MFC
FACTOR MARKET EQUILIBRIUM
PRICE TAKING OUTPUT MARKET
PRICE SETTING OUTPUT MARKET
PRICE TAKING FACTOR MARKET
PRICE SETTING FACTOR MARKET
COMPARE NUMBER OF JOBS IN
EACH CASE
FACTOR MARKET EQUILIBRIUM
PRICE TAKING OUTPUT MARKET
PRICE SETTING OUTPUT MARKET
PRICE TAKING FACTOR MARKET
PRICE SETTING FACTOR MARKET
UNIONS AND LABOR SUPPLY
OBJECTIVE:
RESPECT AND WORKING CONDITIONS
TRIANGLE
SHIRTWAIST FACTORY 1911
146 PEOPLE = $75.00
BENEFITS
OBJECTIVE:
RESTRICTING THE SUPPLY/EXCLUSION
EMPLOYMENT FOR MEMBERS
SUBSTITUTION EFFECT/OUTPUT
EFFECT
BOTH REDUCE TOTAL NUMBER OF
JOBS
OBJECTIVE:
RELATIVE WAGES
DEBATABLE EFFECTS ON WAGES
TEXT OFFERS NO SUPPORT FOR
ITS 15 TO 20 PCT
PREMIUM
IF UNION WAGES
WERE HIGHER
MORE
WORKERS WOULD WANT UNIONS
COST INCREASE =>
OUTPUT (EMPLOYMENT)
DECREASE
UNION MEMBERSHIP IN UNITED STATES/BLS REPORT 2004
DATA FROM NOVEMBER 2005
http://www.bls.gov/news.release/union2.t01.htm
12.5 PCT OF TOTAL LABOR FORCE
7.9 PCT
OF PRIVATE LABOR FORCE
36.4 PCT OF GOVERNMENT LABOR
FORCE
12.9 PCT OF MANUFACTURING
LABOR FORCE
WORK RULES
LOGIC: EMPLOYMENT
PRODUCTIVITY VS JOBS
SHORT RUN
LONG RUN
EFFECTS OF COST
SAVINGS ON EQUIPMENT/AUTOMATION
EFFECT ON LABOR MARKET
SUBSTITUTION EFFECT =>
LESS LABOR
OUTPUT EFFECT => MORE
LABOR
NET EFFECT => UNCERTAIN
EVIDENCE SINCE 1945
EFFECT OF COST CHANGE
LONG RUN
EQUILIBRIUM
SHORT RUN
EQUILIBRIUM
LONG RUN
EQUILIBRIUM
EDUCATION AND THE LIFETIME TRADE
HUMAN CAPITAL
WAGE DIFFERENTIALS
SKILLED VS
UNSKILLED LABOR
EFFECT OF MINIMUM WAGE (5.15) ON EACH
EFFECTS OF CREDENTIALS
EDUCATION AS A SCREEN
EDUCATION AS A SIGNAL
EFFICIENCY WAGE
THEORY/RICK'S POLICY
JOB CHOICE
MONEY
RISK
LOCATION
NONPECUIARY BENEFITS
LABOR MARKET DISCRIMINATION
STATISTICAL DISCRIMINATION/EFFICIENT
REAL DISCRIMINATION/COSTLY
WAGE DISCRIMINATION AND ATC
COMPETITIVE MARKETS ALL
AROUND
EMPLOYERS CAN NOT
COMPETE
AND DISCRIMINATE
DISCRIMINATION
REFLECTS LACK OF COMPETITION
CAPITALIST
SYSTEM IS UNFORGIVING
NON COMPETITIVE MARKETS
DIVIDE AND CONQUER LABOR
MARKETS
IS SOLUTION COMPETITIVE MARKETS?
THEORY OF THE SECOND BEST
NO CLEAR ANSWERS
MOST ECONOMISTS
BELIEVE
DISCRIMINATION STILL EXISTS
DISCRIMINATION AND INCOME DISTRIBUTION
ARE TIED TOGETHER