Labor Economic Market

1: Labor Market

Y study LE

1. Personal Perspective: Direct relevance to us, management position
2. Social Perspective: Current socio-economic problem
3. Quantitative Importance to economy: labor important source of household income (wage size)
4. Labor Market= unique feature

1. Work deliver themselves,
2. Continuity of employment, relations
3. Multiplicity of market
4. Heterogeneity of workers and jobs

Basic of LM: LM outcome

1. Change level of composition of LB supply  
2. Change level of composition  LB demand
3. Structure of earnings
4. LB management relation & collective bargain
5. Change in level of composition of unemployment

LM Process: Market Forces

1. Market Forces
2. Institutional Forces
3. Sociological Forces

Interaction bw DD & SS, have 2 mechanism 1. W.R change 2. Mobility

LBMB= Check for emp practice and working con. MKF= important determinant in LBMK

PFCOM= Condition for efficient MKF

Institutional Force:  

• Cover Intemention: Law, Regu, facilitates manage the area of insuffi LBMK compliment MK to work efficiency, compete with MKF( creat DD & SS)
• Employer Institution: rule & regu, own wage policy (oligopolistic power), discrimination, wage
• Worker’s institution: Limit SS (Union), PF license, contrac, strike
• Sociological force: social group of- determine wage, allocation, compete in particular market- SS of LB & determin wage rate
• Role of culture: indicate attitude, Role of Discrimination: Preferential Treatment

Modern LBECO: A pragmatic blend: understand reality in all form and shape through practice of model building and empirical hypothesis testing.

2. Supply of labor

Quantity vs Quality

Indifferent curve shows work vs leisure of same utility. Graph 

Marginal rate of Substitution-

Budget Constraint

Utility Maximization

Wage change & effcts on LBSS Behavior

Backward Bending LB SE curve: income and substitution effect

Income effect: Men IE>SE (work, leisure)

Substitution effect: Women SE>IE (work, home, leisure)

Elasticity of LBSS: (Change in Q Supplied)/(Change in wage rate)

Non-LB income: Non LB (UP), Work (Down)

Non Participant:

Over employment:

Under employment:

Time and money cost: 1) Fixed Time Cost 2) Monetary Cost(Fixed & Variable)

Differences in tastes (More sociological reason)