ECON 306 Lecture Notes - Lecture 22: Demand Curve, Closed Shop, Economic Rent
24 May 2017
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Document Summary
Sometimes there are agreements that try to keep the employment outside of the demand for labour, but still gives the flexibility to reflect changes in the curve. E changes if d changes, but still stays off the demand curvel. Maximum class size for techers (decrease the number of classes decreases employment) Maximum size of orchestra (increase in number of gigs increases employment) For the firm, some flexibility is better than no flexibility this explains why often firm accepts. 2 plausible models for w%e ontracts: ldc model: negotiation on the wage ratem the fim sets e, efficient contract model: negotiation on both wage ate and employment. In some cases both firm and union have incentive to bargain for both wage and employment to get efficient contract. In others firm may want/need total control over employment. If costs of monitoring and enforcing an efficient contract is too high. (esp. when firm expects variability in its demand for labour)
