ECON 306 Lecture Notes - Lecture 2: Pension, Labour Economics, Absenteeism
24 May 2017
School
Department
Course
Professor
Document Summary
In econ 208: with a minimum wage, you create unemployment (see the d&s curves) in a competitive market. Monopsony power: if you raise the wage on one worker, you need to raise the wage of other workers too. So the extra cost of hiring the worker is different. Adding up all the increases yields an actually different supply curve. The theory of minimum wage is different with monopsony. There is no extra cost of hiring a new worker to the supply curve is the same, but above the minimum wage the curve takes a leap to where it is going. So in this case the minimum wage reduces employment. The straight line becomes the new effective marginal cost curve. Learning objectives: relative pay rates across jobs, wage differentials for identical skills, safety regulation, adequate compensation for unpleasant or risky jobs, no free lunch for workplace characteristics (some workers end up paying more) Remember: assumption that all workers have identical skills.
