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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 decrease
o 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.
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?