Labor Econ Final Exam Material

Goods intensive commodities

Activities that require large amounts of goods and little time

Labor Participation Rate equation

Actual labor force/potential labor force x 100

Why does the supply curve for labor have a positive slope?

As the price increases the quantity also increases

T/ F The study of U.S. Labor economics is only affected by global or international factors

False

T/F Becker's model has nothing to do with the allocation of time in regards to labor market particiption

False

T/F IF the nationwide demand for workers in a given sector significantly goes up, then wages for nurses will, overall tend to go down

False

T/F If the overall national economy is growing quickly jobs become in lower demand by businesses

False

T/F The best way for a business or firm to increase its profits is to increase costs and decrease the prices for the goods or services they sell

False

T/F The higher the relative costs of labor the more labor a firm will usually hire

False

T/F When a worker is more productive it means that worker provides more cost per unit output to his company is going up

False

T/F Workers always prefer to choose new jobs in an industry sector which is considered a sundown industry

False

T/F Workers in any given sector of the economy, tend to migrate to geographical areas or locations in their state or country where wages overall are lower

False

T/F Along an indifference Curve workers have very different levels of utility

False- you are as happy at one point as you are at another

Becker Model of Allocation of Time

Helps understand the work-leisure decision and labor force participation rates and implications

In an economic boom, what is the labor demand?

High demand for labor, but the quantity of labor is less than the demand

Gary Becker's "goals" or main "initiatives for individuals and households in the economy" in general

Households are little factories that allocate time between time labor, production, and consumption

Undocumented persons

Individuals who unlawfully immigrate to the US usually to look for work

In an economic recession, what is the labor demand?

Low demand for labor, but the quantity of labor is high

What is a tight labor market?

More jobs are available than workers who are looking for jobs

Old vs New Labor Economics

Old- not a lot of choice New- workers get more choices and freedom

Example of goods intensive commodities

Picking up groceries curbside

Economies of scale

Savings in cost by an increased level of output

Skilled vs Unskilled

Skilled- Higher education resulting in higher pay Unskilled- Low education resulting in lower pay

Example of time intensive commodities

Sleeping or stargazing

Sunset industries vs sunrise industries

Sunset industries- industries that are slowing down or dying Sunrise industries- up and coming industries

T/F A supply curve has a positive slope

True

T/F Adding more education or training in a given labor field or sector is a big part of a person investing in their overall human capital

True

T/F If a business is able to reduce or cut the wages of their workforce per unit of production, then assuming sales stay the same price for a product, profits for the company will go up

True

T/F Labor is considered an input in a business production process

True

T/F Wages tend to fall during recessions but rise in economic expansions

True

T/F Workers seek the highest wages possible, whereas businesses want to hire at the lowest wages possible

True

Why does the demand curve for labor have a negative slope

When the price increases the quantity demanded decreases

Example of captial investment

You decide to enter the workforce straight out of high school instead of attending college to earn money and on-the-job training

Zones of production

a firm chooses to operate to produce output when an increase of labor increases efficiency

Time stress for the workforce

a lack of time to do desired activities

The Law of Diminishing Marginal Returns

as you have more of an object, the utility per each added unit decreases

What is capital investment?

attending college/getting a degree beyond high school

Average production

average cost per unit produced per set of resources

Time intensive commodities

dealing with a large amount of time and a small amount of goods

Unskilled Labor

does not require knowledge and most people can do it

Discouraged worker effect

during a recession, someone unemployed might feel pessimistic about the labor market and not seek employment and become a nonparticipant

Racial gap in labor participation rates

female gap - the labor participation rate had a 12%-15% in the 1950s but has now become way smaller. male gap - increased with African American men being 6-7% lower because of poorer labor market opportunities and low supply

Labor immobilities

geographical, institutional, or sociological barriers to labor mobility

A firm's production function

how much you can produce for all your inputs

Added worker effect

if the primary earner becomes unemployed, the other family member may enter the workforce to maintain income

homogeneous workers and jobs

it is the assumption that all workers and jobs are all the same and have identical characteristics - all workers receive the same wage

Skilled Labor

labor that requires specialized skills and training

Indifference curve

labor vs leisure

General inputs used by all businesses in their production process

labor, capital, resources

Nonparticipating workers

people who do not want to participate in the workforce

Personal perspective vs social perspective in terms of payoffs

personal- you have connections with the market that help you make decisions social- knowledge of labor economies gives you a better understanding of the market

Bureau of Labor Statistics

provides detailed stats on labor force participation and hours of work

Fair Labor Standards Act

requires employers to pay a wage premium for all hours worked in excess of 40 per week

Job ladders

sequence of jobs in an internal labor market, starting with a port of entry and continuing to move to higher skill sets and responsibilities

Labor vs Leisure tradeoff

the amount of income one must give up in order to achieve more leisure and vice versa

Marginal Revenue Product (MRP)

the amount of revenue that you get from one additional unit

Marginal production

the cost of one more unit to be produced

Nonwage Benefits

the differences in earnings for high school vs college graduates. Higher fringe earnings and obtain more pleasant jobs

Post World War "Baby Boom"

the generation that is now at the age of retirement and is the leading cause of the great resignation

Equilibrium wage

the intersection of the labor demand and labor supply curves

Acceptance wage

the lowest wage that is able to entice a worker to accept a job

The Labor Participation Rate

the percentage of the working-age population in the labor force

Static efficiency

the resources of a fixed quality that produces products at the lowest price at any point

Dynamic efficiency

the resources that produce goods and services at the lowest price in the long run

Population Base

the size of a nation's labor force depends on the size of the population and the fraction of its population participating in the labor market

Skill transferability

the skillset that is appropriate for one job/location to be able to be applied in another job/location

Labor Economics

the study of how workers behave, wages the employees receive, how demand changes, and how employers change

Total production

total amount produced per set of resources

T/ F Labor economies generally is considered more of microeconomics more than macroeconomics

true

Underemployment vs Overemployment

underemployment- when workers want to work more hours with increased earnings overemployement- choose less hours and more leisure

Scarcity

unlimited wants but limited resources

Waged structure

wage differentials broken down in categories; industry, location, occupation

Opportunity Cost

what you have to give up to get something else

Hedonic Theory of Wages

workers are interested in maximizing net utility and are willing to exchange that which produces utility to get reductions in something that yields disutility

Occupational mobility

workers movement to a different occupation