Beruflich Dokumente
Kultur Dokumente
McGraw-Hill/Irwin
1. Labor Law
13-2
o Post-1930 period
Many labor relations laws were passed in the 1930s.
13-4
Wagner Act
Gave unions the right to be free from interference from employers Gave unions right to bargain as a unit with employers Outlawed unfair labor practices
13-7
2. Minimum-Wage Law
13-8
Facts
o The minimum wage is $7.25 and was last increased in July 2009. o Characteristics of minimum wage workers:
47% age 16 to 24 68% female 12% African-American 56% part-time workers
13-9
Controversy
o Proponents argue the minimum wage:
Is needed to provide a living wage Stops exploitation by monopsonistic firms Shocks employers into greater efficiency
Basic Model
At a minimum wage of Wm, employers will hire only Qd rather than Q0 workers. The higher minimum wage will encourage Qs workers to look for employment. Wage rate SL Wm W0 f a b e c
The impact on employment (ab) will be smaller than the impact on unemployment (ac).
The minimum wage will cause an efficiency loss of fae. The more elastic is SL and DL, the larger is the unemployment consequences.
DL
Qd Q0
Qs
Incomplete Coverage
Wage rate Wage rate
The minimum wage Wm imposed on the covered sector reduces employment from C0 to C1.
The displaced workers from the covered sector Wm will seek employment in the uncovered sector and thus increase the supply of W 0 labor in the sector.
W0 DC Wu Du
Though total employment in the economy will remain unchanged, the wage in the uncovered sector will fall from W0 to Wu. Society will suffer an efficiency loss due to themisallocation of labor.
C1 C0
Covered
Quantity of Labor
U0 U1
Uncovered
Quantity of Labor
13-12
Shock Effect
A minimum wage such as Wm Wage rate may shock firms out of their organizational inefficiency. As a result, the marginal product of labor may rise, shifting the labor demand curve rightward (DL to DL). As a result, a portion of the unemployment predicted by basic model may be mitigated (xc rather than ac). It is unlikely that the shock effect is large since inefficiency can only exist in less competitive product markets and the minimum wage is usually binding in more competitive markets. Wm W0 a x c SL
DL
D L
Q d Q d Q 0 Q s
DL=MRP=VMP
Q0 Q1
Quantity of Labor Hours
13-14
Other Considerations
o Union support
Unions lobby for higher minimum wages. Higher minimum wages help unions by raising the cost of nonunion of labor.
The higher cost of nonunion goods will increase the demand for union products.
Empirical Evidence
o Employment and unemployment
A higher minimum wage reduces the employment of teenagers more than those of adults.
Teenagers are more likely to earn the minimum.
o Human capital
A higher minimum wage reduces on-the-job training and increases the dropout rate from high school.
o Poverty
The minimum wage has little effect on the poverty rate.
13-16
13-17
13-18
10
15
20
25
30
13-19
Increased job safety benefits the firm by permitting them to pay lower wages, reduce worker turnover, and have lower worker compensation rates. The additional increase in benefit to the firm declines as the level of job safety rises. Thus, firms face a declining marginal benefit of job safety.
That is, it becomes increasingly costly to increase job safety and so they face a rising marginal cost of job safety.
MCS
MBS
QS
The optimal amount of job safety is at QS, where the MBS = MCS.
Imperfect Information
MB, MC of Job Safety If workers have full information about work hazards and accurately assess job risks, QS level of job safety will optimize societys well-being. If workers are unaware of workplace danger or underestimate it, they will not be proper wage premium, and the firm will not gain the benefit of lower wages as it provides more safety. Thus, the marginal benefit of each unit of job safety will be less (MBS rather than MBS), and the firm will underprovide job safety from societys viewpoint (QS rather than QS). MCS
MBS MBS
Q S Q S
Workplace standards often bear no relationship to reductions to job injuries and illness.
13-23
13-24
13-25
13-26
Economic Rent
o Economic rent in the labor market is the difference between the wage paid to a particular worker and the wage just sufficient to keep that person in his or her employment. o Government provides economic rents through occupational licensing and trade barriers.
13-27
Economic Rent
At the market wage of $16, employers will hire Q0 workers.
The labor supply curve indicates that these Q0 workers collectively receive economic rent equal to the area abc. The Qj worker receives a $4 per hour rent ($16 minus the persons opportunity cost of $12). Wage rate S
$16 b
$12 D
a
Qj
Q0
g D
10
D1 D0
Q0 Q1
13-31