Kinh tế vi mô FTU - Lecture 14

Motivation: Mapping logistic jobs in the US Microeconomics June 29, 2020 1 / 31 Motivation: Grab bike labor market Microeconomics June 29, 2020 2 / 31 Chapter 7: Labour Market June 29, 2020 Microeconomics June 29, 2020 3 / 31 Content 1 Labor demand (Additional reference: Robert Pindyck and Daniel Rubinfeld: Microeconomics, 8th edition) 1 2 3 4 2 Definition Law of labor demand Marginal revenue product of labor Optimal labor hiring decisions of firms Labor supply (Additional reference: Robert Pindyck and Daniel Rubinfeld: Microeconomics, 8th edition) 1 2 3 Definition Factors affecting the labor supply Backward - bending supply of labor 3 Equilibrium in competitive labor market 4 Equilibrium in labor market with monopsony and monopoly power Microeconomics June 29, 2020 4 / 31 Labor demand Labor demand is a derived demand Most labor services are inputs into the production of other goods. To understand labor demand, we need to focus on the firms that hire the labor and use it to produce goods for sale. By examining the link between the production of goods and the demand for labor to make those goods, we gain insight into the determination of equilibrium wages. Microeconomics June 29, 2020 5 / 31 Labor demand Ford to cut 1400 jobs as sales level off, stock price lags (May, 2017) Microeconomics June 29, 2020 6 / 31 Two assumptions about our firm Firm is competitive both in the market for apples (firm is a seller) and in the market for apple pickers (firm is a buyer) A competitive firm is a price taker (P=MR). The firm is profit maximizing The firm does not directly care about the number of workers it has or the number of apples it produces. The firm cares only about: πismaximizedwhenP = MC The firm’s supply of apples and its demand for workers are derived from its goal of maximizing profit. Microeconomics June 29, 2020 7 / 31 Derived labor demand Microeconomics June 29, 2020 8 / 31