劳动经济学第四章

Elasticity Along a Linear Demand Curve
• This indicates that own-wage elasticity declines continuously as labor use rises along a linear demand curve. The diagram below illustrates this relationship.
Elasticity and Slope
Note, for example that:
– an increase from 1 to 2 is a 100% increase, – an increase from 2 to 3 is a 50% increase, – an increase from 3 to 4 is a 33% increase,
Elasticity and Slope
• Slope involves a relationship between the change in the level of the wage and a change in the level of employment. Elasticity involves a relationship between percentageபைடு நூலகம்changes in these variables.
Hicks-Marshall Laws of Derived Demand
Own-wage elasticity of labor demand is relatively high when:
• the price elasticity of demand for the final product is relatively high, • it is relatively easy to substitute other factors for this category of labor, • the supply of other factors of production is relatively elastic,
Elasticity and Slope Comparisons
Hicks-Marshall Laws of Derived Demand
Own-wage elasticity of labor demand is relatively high when:
• the price elasticity of demand for the final product is relatively high,
Third Hicks-Marshall Law
• Own-wage elasticity of labor demand is relatively high when the price elasticity of supply is relatively high for other factors of production.
Chapter 4: Labor Demand Elasticities
Own-wage Elasticity of Labor Demand
Own-wage Elasticity of Labor Demand
The own-wage elasticity of labor demand is a measure of how sensitive is the demand for a particular category of labor to a change in the wage rate in that specific labor market.
First Hicks-Marshall Law
• This works through the scale effect:
– Higher wages result in higher average and marginal costs, – Higher costs result in a higher product price, – Higher prices result in a reduction in the quantity of the product demanded, – A reduction in sales results in a reduction in output and in input use.
• This law explains why the demand for labor will be less elastic at the level of the labor market than at the level of an individual firm. • Another implication of this law is that labor demand will be more elastic in the long run than in the short run (since the demand for final products is more elastic in the long run than in the short run).
First Hicks-Marshall Law
• Own-wage elasticity of demand is relatively high when the price elasticity of demand for the final product is relatively high.
Second Hicks-Marshall Law
• Own-wage elasticity of labor demand will be relatively high when it is relatively easy to substitute other factors for this category of labor.
Elasticity Along a Linear Demand Curve
• If we consider two demand curves that pass through a common point, though, we can use the slopes of the curves to compare the elasticity of demand at that particular starting point. • In this case, a steeper curve will be more inelastic than a flatter curve.
Elasticity and Slope
Note, for example that:
– – – – – – an increase from 1 to 2 is a 100% increase, an increase from 2 to 3 is a 50% increase, an increase from 3 to 4 is a 33% increase, an increase from 4 to 5 is a 25% increase, an increase from 10 to 11 is a 10% increase, and an increase from 100 to 101 is a 1% increase.
Elasticity and Slope
Note, for example that:
– an increase increase, – an increase increase, – an increase increase, – an increase increase, from 1 to 2 is a 100% from 2 to 3 is a 50% from 3 to 4 is a 33% from 4 to 5 is a 25%
Second Hicks-marshall Law
• Own-wage elasticity of labor demand will be relatively high when it is relatively easy to substitute other factors for this category of labor. • This law works through the substitution effect.
Elasticity and Slope
• Slope involves a relationship between the change in the level of the wage and a change in the level of employment. Elasticity involves a relationship between percentage changes in these variables. • A constant change in the level of a variable will not result in a constant percentage change in that variable.
Hicks-Marshall Laws of Derived Demand
Own-wage elasticity of labor demand is relatively high when:
• the price elasticity of demand for the final product is relatively high, • it is relatively easy to substitute other factors for this category of labor,
Elasticity and Slope
Note, for example that:
– an increase from 1 to 2 is a 100% increase,
Elasticity and Slope
Note, for example that:
– an increase from 1 to 2 is a 100% increase, – an increase from 2 to 3 is a 50% increase,
Hicks-Marshall Laws of Derived Demand
• the price elasticity of demand for the final product is relatively high, • it is relatively easy to substitute other factors for this category of labor, • the supply of other factors of production is relatively elastic, and • this category of labor accounts for a relatively large share of total costs.
Own-wage Elasticity of Labor Demand
Labor demand is said to be:
• When labor demand is elastic, a 1% increase in the wage will cause employment to fall by more than 1%. If labor demand is inelastic, a 1% wage increase will cause employment to fall by less than 1%. Employment will fall by 1% when the wage rises by 1% if labor demand is unit elastic.