Notes 11 - Labor Markets PDF

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Labor - Businesses = demand - Worker = supply Marginal Product of Labor (MPL): additional output produced from hiring one more worker MRPL = MPL * MR total $ = # * $ Marginal Revenue Product: benefit from hiring one more unit of labor

MRPL = MP * P (since MR = P) (Value of Marginal Product of Labor: VMPL, = MP * P) VMPL = MRPL if perfectly competitive MR < P if not perfectly competitive, so VMPL = w

Firm: Consumer Surplus = A+B+C Workers: Producer Surplus = D Total Surplus = A+B+C+D Deadweight loss = E+F Monopsony: Max Profit (pi): MRPL = MCL (demand = mc) (dec. employment + wage) BUT, no unemployment (unemployment = excess supply, which is not the case)

Labor market discrimination

Prejudice: unbased, preconceived bias against a group Implicit bias: judgements made unconsciously

Institutional discrimination: differential treatment by race perpetrated by organizations (regardless of intentions) (ex. referrals are implicitly discriminatory because same races tend to stick together)...