ECON 2010 Lecture Notes - Reservation Wage, Marginal Product, Diminishing Returns
Document Summary
U. s. real earnings in 2010 are about twice real earnings in 1960, and nearly five times real earnings in 1929. Trend 2: slower wage growth since early 1970s. Real gdp per capita doubled between 1960 and 2010, but average real weekly earnings of production workers fell. Income with an advanced college degree is three times the income of a high school graduate, and four times the income of a worker who did not graduate from high school. In 1970, 57% of the over 16 population had jobs in 2007, 63% of the over 16 population had jobs. B/w 1980 and 2007, the us economy created 46 million new jobs, and employment increased 46%. Focus on aggregate levels of employment and real wages. Marginal product extra product that an added worker generates. Assumes non-labor inputs are held contstant the marginal product decline as more and more workers are added. Value of maginal product (vmp) extra revenue that an added worker generates.
