Labour Economics

PersaudApril 6, 2013

Labour as a Resource

• The demand for labour is viewed in the same way as the demand for goods and services

• How do we figure out how much labour we need in the market place?

• Workers are the suppliers, business firms are the consumers and the price is the wage rate

Demand for Labour

• Direct Demando Can be looked at as the demand for goods and services.o Directly use our dollars to indicate how much we want the

goods/service (utility) at every price level.

• Derived Demando Derived or dependent on consumer demand for the good or

service.o In other words, the greater the quantity demanded of a good or

service, the greater the quantity of labour demanded to produce it.

Productivity

• Important concept when looking at the labour market.

• Not just important to know how much of a product is demanded, the labour market is also affected by how MUCH each worker can produce in a specified period of time.

Marginal revenue product of labour (MPRL)

• Explains how demand for labour is derived

• As an additional unit of labour is added to a firm’s productive process, the additional output that is created is known as the marginal product.

• See page 172 in your text books Fig. 8.1

Factors that shift the labour demand curve

• There is a change in quantity demanded as the price of labour changes

• Factors that may shift the labour demand curve:o Change in the demand for the product of labour.

• (e.g. if there is a decrease in demand for cars, then the demand for auto workers will decrease)

o A change in the price of other productive resources• If it is cheaper to use automation in a factory, the demand for

the factory workers will decreaseo A change in worker productivity

• If workers are more productive, then the demand for them will increase – better worker training and/or better management

Supply of Labour

• Number of people willing to offer their services to firms at each of the possible wage rates

• As wages increase, more people are willing to offer their services in the labour market.

Considerations that affect the supply curve:- specific skills – eg doctor- geographic location – remote area fewer people - jobs that seem unpleasant/dangerous – fewer people

willing offer their services

Factors that shift the labour supply curve

• Changes in the income tax rates – more taxes, less workers

• Changes in size and composition of the populationo Age distribution ex.

• Changes in household technology – more free time to enter the workforce

• Changes in attitudes around work – women, gen x

Unemployment Rate as an Economic Indicator• Unemployment Rate : the % of the labour force who are

not working but are actively seeking employment

• On board calculation.

Milestone 1• Date 1

Milestone 2• Date 2

Milestone 3• Date 3

Milestone 4• Date 4

Timeline

Date 1 Date 2 Date 3 Date 4

Timeline

Date 1

Date 2

Date 3

Date 4

Timeline

Video : Generation Jobless CBC Doc Zone

Video : Generation Jobless CBC Doc Zone

• http://www.cbc.ca/doczone/episode/generation-jobless.html

Looking Ahead

• When is the next milestone?

• What are the expected deliverables?

• Known risks and issueso What is the investigation timeline for

these issues?

• What are the immediate next steps?

Dependencies and Resources

Project

Vendors

Manufacturing

SalesEngineering

Remote Teams

Appendix

Appendix

• Budget

• Design documents

• Marketing plan

• Supplemental documents

• Contact information