econ labor second quiz
some wages differences are can be attributed to human capital
wage discrimination
another name for minimum wage
wage floor
real wages vary for workers depending on
wage trends(location, part time, etc)
discrimination can be interpreted as
a leftward shit in the labor demand curve
human capital
a person's accumulated knowledge and skills
monopsy
a situation to which there is a single buyer of a particular good or service in a given market
price-rate system
a system by which workers are paid a specific amount per unit they produce
industrial union
a union organized within a given industry, whose members come from a variety of occupations
price rate systems are common in
agriculture
with compensating differentials
workers may seek out riskier jobs in order to be paid more
the same supply curve may slope upward for some range of wages and
downward for another range
an individual has to make decisions between working and acquiring human capital through
education and training
the cost of acquiring human capital is
forgone wages
an investment in college education raises the amount of
human capital
through restrictions unions shift the supply curve to the
left
alternatives to work are called
leisure
the price of leisure is the opportunity cost of
not working, the wage
wages can be thought of as
price of the alternative activity(home or leisure)
In the labor market
the higher the wage, the less attractive leisure will seem to work
the labor market model also predicts that the equilibrium wage equals
the marginal revenue product of labor employed at a firm increases
union workers make
more money by 15 percent
you should invest in human capital if
returns are greater than costs
the difference between temporary and permanent changes helps explain
the dramatic decline in the average hours worked per week in the US as wages have risen over the last century- more permanent change with income effect
labor productivity differences are the underlying reason for
wage differences
labor union
a coalition of workers organized to improve the wages and working conditions of the members
investment
a decision to spend funds or time on something now because it pays off in the future
compensating wage differential
a difference in wages for people with similar skills based on some characteristic of the job such as riskiness, discomfort, or inconvenience of the time scheduele
economists view the education and training that raise skills and productivity as
a form of investment
the substitution effect says
a higher price for a good will make that good less attractive to purchase relative to alternatives
empirical studies show that the quantity of labor supplied rises more in response to
a temporary increase in the wage than to a permanent increase
craft union
a union organized to represent a single occupation whose members come from a variety of industries
when a person is deciding how much to work we need to consider
alternatives to work
deferred payment contract
an agreement between a worker and an employer whereby the worker is paid less than the marginal revenue product when young, and subsequently paid more than the marginal revenue product when old
the decision to invest in human capital can be approached like
any other economic choice
the decision to consume more leisure works like to the decision to consume
any other good
wage differentials are an important source of differences in wages that are not
based on marginal product
method by which unions raise wages
by communicating with management, motivating worker, and using democracy
comporable worth porposals can cause
change for compensated workers, surpluses, and shortages
income effect
changes in price of a good either reduce(if a price increase) or expand(if a price decrease) your ability to buy all goods, including leisure
the differences between whites and blacks are not closing as
closely
competition among firms may reduce
discrimination
if a firm has market power discrimination can still
exist
benefit of human capital is the
extra wages one can earn using the knowledge and skills accumulated from going to school or receiving on-the job training
signaling and human capital both role in explaining
higher wages of college grads
leisure activities include
homework, talking on the phone, going bowling, hiking
the skills of a worker depend partly on
how much schooling and training the worker has had
price rate systems are used for
incentives or when managers cannot observe the worker carefully
the quantity of labor supplied tends to decrease, when wage rises because of
income effect
the labor market model predicts that wages in the United States should
increase when labor productivity increases
The decision about whether to work and how much to work depends on
individual circumstances
the sensitivity of the quantity supplied to the wage
is probably small for most workers. but economists say could be large so it is useful to distinguish supply curves
The market labor supply curve
is the sum of many people's individual labor supply curves
as more parents have to potential workers
it has become a household decision
the point of intersection where the quantity of labor supplied equals the quantity of labor demanded is
labor market equilibrium
risky jobs cons
less social interactions and dangerous
the frequencey of buying and selling labor is
long term
labor unions raise wages by incresing
marginal product
labor productivity is a good indication of trends in the
marginal product of labor on average in the US
if the marginal product of labor increases with additional skills from investment in human capital then
on average wages for people with a college education should be higher than those for people without a college education
wages can be thought of as price of the alternative activity because
opportunity cost of allocating an hour to that activity is the forgone wage that could have been earned from work.
labor productivity
output per hours of work
comporable worth proposals
people who propose laws for equal pay from discrimination
suply and demand model is a model of
reality NOT REALITY ITSELF
the labor market model predicts that the firm's labor demand curve will
shift to the right as the firm will be willing to hire more workers at any given wage
a college degree -- to an employer that they are skilled
signals
impact of minimum wage depends on
skill
although human capital differences explain some of the wage dispersion
some people have argued that it is not skill of college students but because they are screened
changes in wages have both a -- and -- effect on the labor supply
substitution and income
the income effect works in opposite direction from
substitution effect
the decision to work can be analyzed with the concepts of
substitution effect and income effect
unions raise wages by restricting
supply
labor unions play a role in the
supply and demand model
An individual's labor supply curve is derived from
that person's decision about whether to work and how much to work at different wage rates
on-the-job training
the holding of the skills of a firm's employees while they work for the firm
The labor supply curve slopes downward if
the income effect dominates(as the wage rises, individuals work less can earn more money by working fewer hours)
if the marginal product of labor rose for an economy as a whole
the labor demand curve for the economy should shift to the right and both the equilibrium quantity of labor and the equilibrium wage should also rise
labor productivity has been large since
the mid 1990's
hazardous duty pay is common in
the military
an individual's labor supply curve can be viewed as
the outcome of choice between work and some other activity, whether home work or leisure
if a person's marginal benefit from more leisure is greater than wage
the person will choose more leisure
backward bending labor supply curve
the situation in which the income effect outweighs the substitution effect of an increase in the wage at higher higher levels of income, causing the labor supply curve to to bend back and take on a negative slope
labor market equilibrium
the situation in which the quantity of labor supplied equals the quantity of labor demanded
bilateral monopoly
the situation in which there is one buyer and one seller in a market
the quantity of labor supplied tends to increase when the wage rises because of
the substitution effect
the labor supply curve can slope either upward or downward because
the substitution effect and income effect work in opposite directions
The supply curve slopes upward if
the substitution effect dominates(individuals work more because price of leisure goes up)
wage differences are discrimination if
the wage differences cannot be explained by differences in marginal or other factors unrelated to raced or gender.
productivity differences are an explanation for
the wage gap between workers who do not receive education beyond high school and those who are college educated
the model for the labor market predicts
the wage in the labor market will be at the intersection of the supply and demand curves
minimum wage is a cause for
unemployment of less skilled workers
the price of leisure is the
wage
the decision to obtain working skills is much like the choice between
work and leisure
