The economics of labor markets

Effects of a wage increase If the wage rate increases, this individual's constraint line pivots up from X,Y1 to X,Y2.

The economics of labor markets

Lori Alden A labor supply curve shows the number of workers who are willing and able to work in an occupation at different wages.

You can easily demonstrate that the labor supply curve has a positive slope by deriving one with your students. Plot the quantity of labor supplied The economics of labor markets those earnings as a point on a graph.

Draw a curve through the points to show the labor supply curve. A labor demand curve shows the number of workers firms are willing and able to hire at different wages.

SparkNotes: Labor Demand: Introduction to Labor Markets

As a rule, a firm will hire a worker only if the additional revenue it gets from doing so covers the additional cost. The additional revenue a worker brings to a firm, in turn, depends on both the additional output he or she contributes to the firm and the price of that output.

Labor demand curves slope downward because of the law of diminishing returns. As a firm hires more and more workers, each additional worker contributes less and less additional output—and revenue—to the firm. Anything that changes either the amount of output workers can produce or the price of that output will shift the labor demand curve.

Fishers, for example, would be more productive if they were provided with better training, more equipment, or improved technology, so all of these things would tend to increase the demand for them.

So would a new diet craze that calls for people to eat more fish, since that would tend to increase the price of fish. We must put the supply and demand curves together to explain why workers in different occupations earn different amounts.

Figure 1, for example, shows supply and demand diagrams for registered nurses and hotel clerks. One reason that nurses earn more than hotel clerks is that they tend to be better educated and therefore more productive.

This makes the demand for nurses relatively high. The supply of nurses, on the other hand, is relatively low—not many people are willing and able to go through the difficult and lengthy training it takes to enter nursing.

Differences in education and training explain many of the differences in earnings we see between occupations. Inthe median earnings of males in the age group who graduated from college were 60 percent higher than those who had only completed high school or a GED, while those of females were 95 percent higher.

These earnings differences help explain why so many people choose to get more training and education after high school—more education is often well rewarded with higher pay.

There are, of course, other things besides education that explain wage differences. For example, it normally takes only a high school diploma to become a fitness trainer or a hazardous materials removal worker. This raises a question: If they did, then the supply of fitness trainers would decrease and the supply of hazardous materials removal workers would increase, as shown in Figure 3.

Many of us would love to become professional athletes, entertainers, or supermodels, but lack the necessary talents or attributes to do so. This keeps the earnings of the people in these occupations high.

People are also reluctant to enter occupations that are risky, like logging, or unpleasant, like port-a-potty cleaning.

The economics of labor markets

Discrimination can also prevent people from entering certain occupations. Luck can also play a role in determining wages, though your students may exaggerate its importance.

Ask them to provide examples of people who they think are receiving high earnings because of luck.

After discussing these examples, your students may discover that luck has less to do with success than they initially thought. For example, as the average age of Americans increases, people will likely demand more nursing services and so the demand for nurses will tend to rise.

The demand for hotel clerks also is predicted to rise over the next several years. This is because incomes are expected to rise, and people tend to travel more as their incomes rise.

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Except as noted above, any other use, including the reproduction, modification, distribution, transmission, republication, display, or performance, of the content on this site is strictly prohibited.The labour supply is the number of hours people are willing and able to supply at a given wage rate Short revision video on labour supply It is the number of workers willing and able to work in a particular job or industry for a given wage The labour supply curve for any industry or occupation will.

Using data on the near-universe of online US job vacancies collected by Burning Glass Technologies in , we calculate labor market concentration using the Herfindahl-Hirschman index (HHI) for each commuting zone by 6-digit SOC occupation. The average market has an .

economics. Whether you’re studying macroeconomics, microeconomics, or just want to understand how economies work, we can help you make sense of dollars.

Box and Cox () developed the transformation. Estimation of any Box-Cox parameters is by maximum likelihood. Box and Cox () offered an example in which the data had the form of survival times but the underlying biological structure was of hazard rates, and the transformation identified this.

Introduction to Labor Markets We have already studied how the market functions when buyers and sellers are dealing with goods and services: firms supply goods and services in response to the equilibrium price, and households buy these goods and services in response to the equilibrium price.

Labor Markets (Chapter 2) HTML format narrated PowerPoint PowerPoint Slideshow Short-run Labor Demand (Chapter 3) HTML format narrated PowerPoint PowerPoint Slideshow Long-run Labor Demand (Chapter 3 cont.) HTML format narrated PowerPoint PowerPoint Slideshow Labor Demand Elasticities (Chapter 4.

Concentration in US Labor Markets: Evidence From Online Vacancy Data