Demand for Labor

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Labor Market Demand

Labor Market

Reversed demand and supply

Demand --> firms

Supply --> people

EXAMPLE: Car Wash in Perfect Competition

- MR = $5 per car wash

- How much will we make per unit of labor?

THINK ABOUT THIS: How much am I getting per unit of labor added?

How much should you get paid for a job?

Voluntary Exchange

The wage must cover his opportunity cost.

Derived Demand

As pretzel demand increases, demand for labor increases.

Wage Discrimination

Monopsony- When there is only one company hiring and workers are relatively immobile.

Efficiency Wages keep workers happy though they are above equilibrium.

Unions

Strike

Minimum Wage- a price floor on labor

How high should the minimum wage be?