Labour Economics Exam

Résumé du document

This document tries to answer the four following questions: What are the short run demands for labor differences between competitive output markets and less-then competitive (i.e. monopoly power) output markets? Why is labor demand more elastic if the share of labor in total costs is greater? What does Substitution Hypothesis suggest about the causes of declining union membership? Within the discrimination context, does employee discrimination lead to a wage differential among the workers in the segregated workforce? Explain why?

Extraits

[...] However, in this case, no wage differential arises between the two types of workers. Colour blind employers hire whichever type of labour is cheaper. Competition for labour implies wage equalization eventually across the two groups. So employee discrimination does not really explain why we might see wage differentials between equality skilled green and purple workers. Employee discrimination also does not affect the profitability of firms as long as the two types of workers are equally productive. In this sense there are not market forces that are likely to diminish employee discrimination over time. [...]

[...] As the wage drops the industry employment is not C Why is labour demand more elastic if labour's share in total costs is greater? The greater the labour intensity in the production process, the greater effect on employment a change in wage will have. What the Substitution Hypothesis suggests about the causes of declining union membership? The firm always hire more workers when the wage falls, but the effect on the amount of capital is ambiguous. The decline in the wage encourages the firm to adjust its input mix so that it is more labour intensive. [...]

[...] As long as capital and labour are normal inputs, the scale effect increases both. The wage cut encourages the firm to adopt a different method of production, which is more labour intensive. This is the substitution effect to E'), substitution away capital for labour. Both Scale and Substitution effect increases the demand for labour. The scale effect also increases the use of capital but the substitution effect reduces it. Within the discrimination context, does employee discrimination lead to a wage differential among the workers in the segregated workforce? [...]

[...] Within the discrimination context, does employee discrimination lead to a wage differential among the workers in the segregated workforce? Explain why? What are the short run demand for labour differences between competitive output markets and less-then competitive (i.e. monopoly power) output markets? The factor of productions comprise different types of manpower (skilled / unskilled) and different types of plant (machinery , plant), usually called capital In the SR, the volume of labour is adjustable whilst other factors of production are fixed. The short run labour demand is a decreasing function of the wage. [...]