Labour market

Labour market

workers supply labour
firms/employers demand the services of labour
a worker's supply curve can be either upward sloping or backward bending
in a perfectly competitive labour market, the MRP curve is an employer's demand curve for labour
in perfect competition, the market supply of labour is the sum of the supply curves of labour for ALL the workers in the labour market
in perfect competition, the market demand for labour is the sum of the demand curves for ALL the employers in the labour market
in perfect competition, the equilibrium wage is set where market demand equals market supply, and all the firms and workers in the market are passive price-takers at the market-set wage
in both labour markets firms employ workers up to the point at which MRP = MC L
1. wage rate and level of employment are lower in monopsony than for the whole of a perfectly competitive labour market
if a TU is formed in a previously perfectly competitive labour market, any wage increase it achieves is likely to REDUCE demand for labour
1. in monopsony, a TU may (within certain limits) be able to increase BOTH wage and employment level
2. similar results for introduction of national min. wage
wage discrimination takes place when employers with monopsony power pay different wage rates based on workers' different willingness to supply labour

Resource summary

	Created by theemilyflora over 10 years ago