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    Session 7.2015

    Uploaded by

    Amgad Elshamy
    The document discusses the economic concepts of supply and demand as they relate to the labor market. It outlines factors that influence the demand and supply curves for labor such as wages, productivity, birth rates, and immigration. The document also discusses types of unemployment like voluntary, involuntary, and discouraged workers.

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    Session 7.2015

    Uploaded by

    Amgad Elshamy
    13 views2 pages
    The document discusses the economic concepts of supply and demand as they relate to the labor market. It outlines factors that influence the demand and supply curves for labor such as wages, productivity, birth rates, and immigration. The document also discusses types of unemployment like voluntary, involuntary, and discouraged workers.

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    The document discusses the economic concepts of supply and demand as they relate to the labor market. It outlines factors that influence the demand and supply curves for labor such as wages, productivity, birth rates, and immigration. The document also discusses types of unemployment like voluntary, involuntary, and discouraged workers.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    13 views2 pages

    Session 7.2015

    Uploaded by

    Amgad Elshamy
    The document discusses the economic concepts of supply and demand as they relate to the labor market. It outlines factors that influence the demand and supply curves for labor such as wages, productivity, birth rates, and immigration. The document also discusses types of unemployment like voluntary, involuntary, and discouraged workers.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Supply and demand for labor

    Supply and demand approach is useful for studying labor market conditions.

    Firms and employers represent the demanders in the labor market. They demand labor to produce
    goods and services.

    All of us represent the suppliers in the labor market. We supply labor during some phase of our lives.

    The price of labor is the “real wage” paid to workers in exchange for their services.

    The quantity of labor is the amount of labor that firms use measured by number of workers.

    Marginal Product of each worker: it is the extra production that is gained by adding one more worker.

    Diminishing returns to labor: it is the tendancy for marginal product to decline as more and more
    workers are added.

    Demand for labor


    Demand curve for labor os downward sloping, meaning that the higher the wage “price”, the fewer
    workers that employer will hire.

    Factors that shifts labor demand curve:


     The price of workers’ output: any increase in the price of workers’ output increase the value
    of the marginal product of labor, causing a right shift of the labor demand curve.
     The productivity of labor: any increase in labor productivity raises workers’ marginal product
    causing a right shift of the labor demand curve.

    Increase in trade lead to:


    - Demand for workers in importing industry declines, loweing real wage and employment.
    - Demand for workers in exporting industry increases, raising real wage and employment.

    Supply of labor:
    The supply of labor is the total number of people who are willing to work at each real wage.
    Labor suppliers are workers and potential workers.

    The labbor supply curve is upward sloping, meaning that the higher the wage “price”, the more
    people are willing to work.

    Factors that shifts labor supply curve:


     Domestic birth rates.
     Immigration and emigration rates.

    1
     The age at which people normally first enter the work force and retire, increase in size of the
    working age population, shifts the supply curve to right.

    Unemployment
    Participation rate: it is the percentage of the working age population in the labor force either
    emplyed or looking for work.

    Voluntarily unemployed workers: at the given level of real wages, he/she wishes to be in the labor
    force but does not yet wish to accept a job.

    Involuntarily unemployed workers: individual would accept a job offered at the going wage rate.

    Discouraged workers: people who say they would like to have a job but have not made an effort to
    find one in the past four weeks.

    Labor unions: organizations that negotiate with employers on behalf of workers.

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