Chương 12 phân tích của các thị trường yếu tố: lao động doc

Chapter 12
The analysis of factor
markets: labour
David Begg, Stanley Fischer and Rudiger Dornbusch, Economics,
6th Edition, McGraw-Hill, 2000
Power Point presentation by Peter Smith
12.2
Some important questions

Why does a top professional footballer
earn so much more than a professor?

Why does an unskilled worker in the EU
earn more than an unskilled worker in
India?

Why do market economies not manage to
provide jobs for all their citizens who want
to work?

Why are different methods of production
used in different countries?
12.3
The demand for labour

Derived demand:
–
the demand for a factor of production is
derived from the demand for the output
produced by that factor.


Equalizing wage differential
–
the monetary compensation for the
differential non-monetary
characteristics of the same job in
different industries
–
so workers have no incentive to move
between industries.
12.4
Demand for factors in the long run

The optimum mix of capital and labour depends
on the relative prices of these factors
–
This helps to explain why more labour-intensive means
of production are used in some countries where labour
is relatively abundant.

A change in the price of one factor will have both
output and substitution effects

A rise in the wage rate leads to
–
substitution towards more capital-intensive techniques
–
but also leads to lower total output
12.5
The demand for labour in the short run


Under perfect
competition, with
diminishing marginal
productivity:

the firm maximizes
profit when the
marginal cost of
employing an extra
worker equals the
MVPL
MVPL
Employment
W
a
g
e
,

M
V
P
L
The marginal value product of labour is the
revenue obtained by selling the output produced
by an extra worker
W
0
12.6
The demand for labour in the short run

MVPL
Employment
W
a
g
e
,

M
V
P
L
W
0
E
…this occurs at E
where wage = MVPL.
L*
Employment is L*.
This decision is consistent
with the MR = SMC rule for
maximizing profit under
perfect competition.
Below L*, extra employment
adds more to revenue than
to labour costs.
Above L*, the reverse is so.
12.7
Monopoly and monopsony power in
the labour market


A firm may have MONOPOLY power in its
output market
–
facing a downward-sloping demand curve
–
so the marginal revenue (MRPL) received from
expanding output is less than the MVPL

as the firm must reduce price to sell more.

A firm may face MONOPSONY power in its
input market
–
facing an upward-sloping supply curve for
inputs
–
so the marginal cost of labour rises with
employment
12.8
Monopoly and monopsony power (2)
W
0
MVPL
L
1
Employment
£
Under perfect competition,
a firm sets MVPL = W

0
and employs L
1
workers
Facing a downward-
sloping demand curve
for its product, the firm
sets MRPL = W
0

and employs L
3
workers
MRPL
L
3
12.9
Monopoly and monopsony power (3)
W
0
MVPL
L
1
Employment
£
MRPL
L
3
A monopsonist recognizes
that additional employment

bids up wages for existing
workers, so MCL shows the
marginal cost of an extra
worker
MCL
Facing a given goods
price, the monopsonist
sets MCL = MVPL
and employs
L
2
workers.
L
2
12.10
Monopoly and monopsony power (3)
W
0
MVPL
L
1
Employment
£
MRPL
L
3
MCL
L
2
For a monopsonist who

also faces a downward-
sloping demand curve
for the product, MCL
is set equal to MRPL to
employ L
4
workers.
L
4
So monopoly and
monopsony power
both tend to reduce
the firm’s demand
for labour.
12.11
The supply of labour

The LABOUR FORCE:
–
all individuals in work or seeking employment

Labour supply
–
for an individual, the decision on how many
hours to offer to work depends on the real
wage
–
an individual’s attitude towards leisure and
income determines if more or less hours of
work are supplied at a higher real wage rate.

12.12
The individual’s supply curve of labour
Hours of work supplied
R
e
a
l

w
a
g
e
SS
1
For the labour supply
curve SS
1
, an increase
in the real wage induces
higher labour supply.
SS
2
Whereas for SS
2
,
there comes a point
where a higher wage
induces less hours of
work to be supplied:
labour supply is

backward-bending.
12.13
Labour supply in aggregate

If we consider the economy as a
whole, or an industry

a higher real wage rate also
encourages a higher participation
rate

so labour supply is likely to be
upward-sloping
12.14
Labour market equilibrium for an industry

The industry supply
curve S
L
S
L
slopes up
–
higher wages are
needed to attract
workers into the
industry

For a given output
demand curve,

industry demand for
labour slopes down

Equilibrium is W
0
, L
0
.
Quantity
of labour
W
a
g
e
D
L
D
L
S
L
S
L
W
0
L
0
12.15
A shift in product demand
Quantity
of labour

W
a
g
e
D
L
D
L
S
L
S
L
W
0
L
0
Beginning in equilibrium,
The new equilibrium is
at W
1
, L
1
.
L
1
W
1
a fall in demand for the
product also shifts the
derived demand for labour

to D'
L
D'
L
D'
L
12.16
A change in wages in another industry
Quantity
of labour
W
a
g
e
D
L
D
L
S
L
S
L
W
0
L
0
Again starting in equilibrium,
An increase in wages in
another industry attracts
labour,

The new equilibrium is
at W
2
, L
2
.
L
2
W
2
so industry supply shifts
to the left –
S'
L
S'
L
12.17
Transfer earnings and economic rent

Transfer earnings
–
the minimum payments required to
induce a factor of production to work in
a particular job.

Economic rent
–
the extra payment a factor receives over
and above the transfer earnings needed
to induce the factor to supply its

services in that use.
12.18
Transfer earnings and economic rent (2)
D
D
SS
Wage
Quantity
A
W
0
L
0
E
In labour market
equilibrium at W
0
, L
0
,
If workers were paid only
the transfer earnings, the
industry would need only
pay AEL
0
in wages.
But if all workers must be
paid the highest wage
needed to attract the
marginal worker into the

industry (W
0
), then workers
as a whole derive economic
rent of 0AEW
0
.
0 A
12.19
Cost minimization

An ISOQUANT
–
shows the different
minimum quantities
of inputs required
to produce a given
level of output

An ISOCOST curve
–
shows the different
input combinations
with the same total
cost, given relative
factor prices.
Capital
Labour
I
I'

I''
K
A
L
0
A