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ECON303: Labor Economics

  • Unit 3: The Demand for Labor  

    This unit focuses on the "demand side" of the labor market.  The demand for labor is quite similar to that of a firm's demand for other inputs in the production process.  However, the demand for labor can also be influenced by important social and political considerations, several of which will be discussed here.  After studying the mechanics of labor demand, you will take a look at how economic policies can regulate various aspects of a firm's labor demand.

    Unit 3 Time Advisory

    This unit should take you 10 hours to complete.

    ☐    Subunit 3.1-3.3: 5-6 hours* 

    ☐    Subunit 3.4: 3-4 hours** 

    ☐    Assessments: 1 hour 

    *(Note: The audio narration for “Chapter 3” is a 30 minute lecture, while the narration for “Chapter 3 (cont.)” is a 40 minute lecture).

    **(Note: The audio narration for “Chapter 4” is 60 minutes long).

    Unit3 Learning Outcomes

    Upon successful completion of this unit, students will be able to:

    • Calculate and identify the shape of the “Marginal Revenue Product” (MRP) of labor.

    • Compare “Marginal Revenue Products” and “Marginal Factor Costs” (MFC) of labor to determine how it affects labor usage by a profit maximizing firm.

    • Analyze labor demand and wages in perfectly competitive markets and in monopsony markets.

    • Analyze the effects of minimum wages under monopsony market conditions and the effect of payroll taxes on equilibrium wage and employment.

    • Calculate labor demand elasticities.
    • Lecture: SUNY-Oswego: Professor John Kane's Lecture notes on Introduction to Labor Economics: Short-run Labor Demand (Chapter 3) and Long-run Labor Demand (Chapter 3 cont.)

      Link: SUNY-Oswego:  Professor John Kane's Lecture notes on Introduction to Labor Economics:Short-run Labor Demand (Chapter 3)” (HTML, Adobe Flash, or Powerpoint) and “Long-run Labor Demand (Chapter 3 cont.)” (HTML, Adobe Flash, or Powerpoint)
       
      Instructions:  Please sequentially click on both parts of chapter 3 from the Table of Contents.  Note that the material is presented in three formats: Single document HTML format, narrated PowerPoint, and PowerPoint Slideshow.  Please go through the narrated PowerPoint to best understand the material.  You can read the HTML text to review the material after listening to the audio.  However, you may skip the notes presented in the PowerPoint slides as they are a repetition of the slides that accompany the audio. If the audio does not work at first, refresh your browser.  These readings cover subunits 3.1-3.3.1 and 3.3.2  respectively.
       
      Note: This reading provides a graphical explanation of the topic.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the web pages above.

    • Reading: New York University: Professor Matthew Wiswall's “Lecture Notes on Labor Economics”

      Link: New York University: Professor Matthew Wiswall's “Lecture Notes on Labor Economics” (PDF)
       
      Instructions: Please click on “Lecture Notes” to access the pdf file with the lecture notes.  Scroll down to page 14, section 3 ("Labor Demand") and read the section in entirety (all the way up to page 32).  This reading covers subunits 3.1-3.4.
       
      Note: This reading provides a mathematical explanation of the topic.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the web pages above.

  • 3.1 The Production Function  

    Note: This subunit is covered by the reading assigned beneath Unit 3.

  • 3.2 Profit Maximization  

    Note: This subunit is covered by the reading assigned beneath Unit 3.

  • 3.3 Short Run versus Long Run Demand for Labor  

  • 3.3.1 The Employment Decision in the Short Run  

    Note: This subunit is covered by the reading assigned beneath Unit 3.

  • 3.3.1.1 Demand for Labor under Perfect Competition  

    Note: This subunit is covered by the reading assigned beneath Unit 3.

  • 3.3.1.2 Demand for Labor under Monopsony  

    Note: This subunit is covered by the reading assigned beneath Unit 3.

  • 3.3.2 The Employment Decision in the Long Run  

    • Assessment: Addison Wesley Companion Website: Ronald G. Ehrenberg and Robert S. Smith's Modern Labor Economics, 8th Edition: Student Resources: “Chapter 3: The Demand for Labor Quiz”

      Link: Addison Wesley Companion Website: Ronald G. Ehrenberg and Robert S. Smith's Modern Labor Economics, 8th Edition:Student Resources: Chapter 3: The Demand for Labor: Quiz” (HTML)
       
      Instructions:  Please click on the “Quiz” icon on the left hand bar to assess your understanding of this chapter thus far.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the web pages above.

  • 3.4 Labor Demand Elasticities  

    • Lecture: SUNY-Oswego: Professor John Kane's Lecture notes on Introduction to Labor Economics: “Labor Demand Elasticities (Chapter 4)”

      Link: SUNY-Oswego:  Professor John Kane's Lecture notes on Introduction to Labor Economics: Labor Demand Elasticities (Chapter 4)” (HTML, Adobe Flash, or Powerpoint)
       
      Instructions:  Please click on “Chapter 4” from the Table of Contents.  Note that the material is presented in three formats: Single document HTML format, narrated PowerPoint, and PowerPoint Slideshow.  Please go through the narrated PowerPoint to best understand the material.  You can read the HTML text to review the material after listening to the audio.  However, you may skip the notes presented in the PowerPoint slides as they are a repetition of the slides that accompany the audio.  If the audio does not work at first, refresh your browser. This reading covers subunits 3.4.1-3.4.3.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the web pages above.

  • 3.4.1 Own Wage Elasticity  

    Note: This subunit is covered by the reading assigned under Unit 3.4

  • 3.4.2 Cross Wage Elasticity  

    Note: This subunit is covered by the reading assigned under Unit 3.4

  • 3.4.3 Policy Implications: Minimum Wage Laws  

    Note: This subunit is covered by the reading assigned under Unit 3.4

    • Assessment: Addison Wesley Companion Website: Ronald G. Ehrenberg and Robert S. Smith's Modern Labor Economics, 8th Edition: “Student Resources: Chapter 4: Labor Demand Elasticities Quiz”

      Link: Addison Wesley Companion Website: Ronald G. Ehrenberg and Robert S. Smith's Modern Labor Economics, 8th Edition: “Student Resources: Chapter 4: Labor Demand Elasticities Quiz” (HTML)
       
      Instructions:  Please click on the “Quiz” icon on the left hand bar to assess your understanding of this chapter thus far.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the web pages above.