The Markets for Labor

This set of flashcards covers key concepts related to the markets for labor, including supply and demand dynamics, wage differentials, and factors influencing the labor market.

What is the demand for labor dependent on in firms like Apple?

The demand for labor is derived from the demand for the goods the labor produces, specifically how many additional units can be produced and the additional revenue generated from selling them.

What does MRP stand for and why is it important for firms?

MRP stands for Marginal Revenue Product of labor, which is the additional revenue generated from hiring one more worker. It helps firms determine the profit-maximizing quantity of labor to employ.

How does an increase in human capital affect labor demand?

An increase in human capital raises productivity and the marginal revenue product of labor, thereby increasing the demand for workers.

What happens to the labor supply curve when the wage rate increases?

As the wage rate increases, individuals tend to supply more labor, consuming less leisure in favor of working more.

What is a compensating differential?

A compensating differential is a higher wage paid to workers as compensation for unpleasant or dangerous job aspects.

How can technological advancements impact labor demand?

Technological advancements can either increase labor demand by enhancing worker productivity or decrease it by substituting labor with technology.

What is one reason why white males might earn more than other groups?

One reason includes differences in education levels, where white workers have historically had higher average education than black or Hispanic workers.