Transcript Labor Market Equilibrium

LABOR MARKET
EQUILIBRIUM
1
Hewi-Lin Chuang, Ph.D.
2010/03/25
98-101年促進就業方案
 方案目標：

促進勞動市場增加就業機會，減少失業問題，以協
助降低失業率，於101年達到3.0%之目標。
 重點工作項目：

本方案定位為一補強的政策措施，協助降低失業率
，涵蓋短、中、長期的作法。

規劃主軸之六大策略：「擴大產學合作」、「強化
訓練以促進就業與預防失業」、「提升就業媒合成
功率減少摩擦性失業」、「提供工資補貼增加就業
機會」、「協助創業與自僱工作者」，以及「加強
短期促進就業措施」等。
2
資料來源： http://www.cepd.gov.tw/m1.aspx?sNo=0010829&ex=1&ic=0000015
就業市場指標
15 歲 以 勞 動 力
上人口 人數
年月別
千
92年
17,572 10,076
93年
17,760 10,240
94年
17,949 10,371
95年
18,166 10,522
96年
18,392 10,713
97年1-9月平均 18,594 10,835
年月別
92年
93年
94年
95年
96年
97年1-9月平均
就業
人數
人
9,573
9,786
9,942
10,111
10,294
10,405
失業
人數
503 57.34 67.69
454 57.66 67.78
428 57.78 67.62
411 57.92 67.35
419 58.25 67.24
430 58.27 67.12
就業者之行業結構
農、林、
漁、牧業
千人
%
千人
%
696
642
590
554
543
534
3,398
3,514
3,619
3,700
3,788
3,840
35.49
35.90
36.40
36.59
36.80
36.90
7.27
6.56
5.94
5.48
5.28
5.13
勞動力參與率
平均 男
女
工 業
失業率
平均 男
女
%
47.14 4.99
47.71 4.44
48.12 4.13
48.68 3.91
49.44 3.91
49.63 3.96
5.51
4.83
4.31
4.05
4.05
4.16
4.25
3.89
3.88
3.71
3.72
3.71
服務業
製造業
千人 %
營造業
千人 %
千人
%
2,600
2,681
2,732
2,777
2,842
2,888
701
732
791
829
846
848
5,480
5,631
5,733
5,857
5,962
6,032
57.24
57.54
57.67
57.92
57.92
57.97
27.16
27.40
27.47
27.46
27.61
27.75
7.32
7.48
7.96
8.20
8.22
8.15
資料來源：行政院主計處，中華民國台灣地區人力資源調查統計年報、速報。
3
失業規模指標
非初次尋職者
年月別
92年
93年
94年
95年
96年
97年1-9月
年月別
92年
93年
94年
95年
96年
97年1-9月
總計
初次尋職
者
小計
千人
503
454
428
411
419
430
千人
85
85
82
82
87
90
總計
初次 非初次
尋職 尋職 15-24歲
30.5
29.4
27.6
24.3
24.2
24.8
29.0
27.0
26.9
23.2
23.0
25.1
(%)
16.9
18.7
19.2
20.0
20.8
21.0
30.9
30.0
27.8
24.5
24.6
24.8
千人
418
369
346
329
332
340
(%)
83.1
81.3
80.8
80.0
79.2
79.0
23.3
21.1
20.4
17.8
17.7
19.0
季節性或 臨
工作場所業務 對原有工作
時性工作 結
其他
緊縮或歇業 不滿意
束
千人 (%) 千人 (%) 千人 (%) 千人 (%)
228 45.3 111 22.1 50
9.9
30 6.0
158 34.8 131 28.9 49 10.8 29 6.4
130 30.4 140 32.7 49 11.4 27 6.3
117 28.5 141 34.3 44 10.7 26 6.3
126 30.1 138 32.9 41
9.8
27 6.4
134 31.2 140 32.5 42
9.7
24 5.6
失業者之失業週數
年齡別
教育程度別
國中及
大專及
25-44歲 45-64歲
高中(職)
以下
以上
32.1
35.6
32.4
30.1
28.8
31.3
35.2
31.1
29.7
27.3
29.1
32.9
29.7
27.4
26.2
25.5
29.8
26.0
23.6
24.0
4
25.8
28.2
25.4
24.5
23.3
26.7
27.1
25.2
25.2
24.3
資料來源：行政院主計處，中華民國台灣地區人力資源調查統計年報、速報。
INTRODUCTION
 Labor
market equilibrium coordinates the desires
of firms and workers, determining the wage and
employment observed in the labor market.
 Market
types:

Perfect Competition

Monopsony: one buyer of labor

Monopoly: one seller of labor
 These
market structures generate unique labor
market equilibria.
5
LABOR MARKET
EQUILIBRIUM
 Workers
prefer to work when the wage is high,
and firms prefer to hire when the wage is low.
Labor market equilibrium “balance out” the
conflicting desires of workers and firms and
determines the wage and employment observed
in the labor market.
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1. EQUILIBRIUM IN A SINGLE COMPETITIVE LABOR
MARKET
Dollars
supply curve gives the
total number of employeehours that agents in the
economy allocate to the
market at any given wage
level; the demand curve
gives the total number of
employee-hours that firms
in the market demand at
that wage. Equilibrium
occurs when supply equals
demand, generating the
competitive wage w * and
employment E *.
S
 The
W*
D
E*
Employment
Equilibrium in a Competitive Labor Market
Note: There is no unemployment in a
competitive labor market. Persons
who are not working are also not
looking for work at the going wage.
7
 Note:
The “single wage” property of competitive
equilibrium has important implications for
economic performance. That is, workers of given
skills have the same value of marginal product of
labor in all markets. The allocation of workers to
firms which equates the value of marginal product
across markets is also the allocation which
maximizes national income. This type of allocation
is called an efficient allocation.
8
(PARETO) EFFICIENCY
 Pareto
efficiency exists when all possible gains from
trade have been exhausted.
 When
the state of the world is Pareto Efficient, to
improve one person’s welfare necessarily requires
decreasing another person’s welfare.
 In
policy applications, ask whether a change can make
any one better off without harming anyone else. If the
answer is yes, then the proposed change is said to be
“Pareto-improving”.
9
EQUILIBRIUM IN A COMPETITIVE
LABOR MARKET
Dollars
S
P
w*
Q
D0
EL
E* EH
Employment
The labor market is in
equilibrium when supply
equals demand; E* workers
are employed at a wage of w*.
In equilibrium, all persons
who are looking for work at
the going wage can find a job.
The triangle P gives the
producer surplus; the triangle
Q gives the worker surplus. A
competitive market maximizes
10
the gains from trade, or the
sum P + Q.
EFFICIENCY REVISITED
 The
“single wage” property of a competitive
equilibrium has important implications for economic
efficiency.

Recall that in a competitive equilibrium the wage equals the
value of marginal product of labor. As firms and workers
move to the region that provides the best opportunities,
they eliminate regional wage differentials. Therefore,
workers of given skills have the same value of marginal
product of labor in all markets.
 The
allocation of workers to firms that equates the
value of marginal product across markets is also the
sorting that leads to an efficient allocation of labor
resources.
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2. COMPETITIVE EQUILIBRIUM ACROSS LABOR MARKETS
The economy typically consists of many labor markets, even for
workers who have similar skills. As long as either workers or firms
are free to enter and exit labor markets, a competitive economy will
be characterized by a single wage.
Dollars
SN
Dollars
S’S
S’N
SS
WN
W*
W*
WS
DN
Employment
DS
Employment
Competitive Equilibrium in Two Labor Markets Linked by Migration
12
COMPETITIVE EQUILIBRIUM ACROSS
LABOR MARKETS
 If
workers were mobile and entry and exit of workers
to the labor market was free, then there would be a
single wage paid to all workers.
 The
allocation of workers to firms equating the wage
to the value of marginal product is also the allocation
that maximizes national income (this is known as
allocative efficiency).
 The
“invisible hand” process: self-interested workers
and firms accomplish a social goal that no one had in
13
mind, i.e., allocative efficiency.
教育別薪資差異
14
產業別就業人數-高教育者
15
產業別就業人數-低教育者
16
台灣教育別薪資差異
新台幣(元)
1995-2009年台灣教育別受雇者每月工作收入
(2005年CPI平減後)
50000
45000
40000
35000
30000
25000
20000
1995
1997
1999
國中及以下
2001
2003
高中(職)
2005
大專及以上
2007
2009
17
3. THE COBWEB MODEL

Our analysis of labor market equilibrium assumes that markets
adjust instantaneously to shifts in either supply or demand
curves, so that wages and employment change swiftly from the
old equilibrium levels to the new equilibrium level. Many
labor markets, however, do not adjust so quickly to shifts in the
underlying supply and demand curves.

Example: the Engineering Market
Note: The adjustment of college enrollments to changes in the
returns to education is not always smooth or rapid, particularly
in fields that are highly technical.
→ The inability to respond immediately to changed market
conditions can cause boom-and-bust cycles in the market for
highly technical workers.
18
Wage
S
W1
W3
We
W2
D’
W0
N0 N2
D
N3 N1
Number of Engineers
Demand increase to D’
temporary supply is N0 → W increase to W1
→ W1 wage induce increase in supply to N1→ excess supply
→ W reduce to W2 → W2 wage reduce supply to N2
→ W increase to W3 → at W3 , supply increase to N3
→ excess supply → W reduces, etc.
19
Overtime the swings become smaller and eventually
equilibrium is reached. → cobweb model.
Note: There are two key assumptions in the cobweb
model:
1.
It takes time to produce new engineers, so that the
supply of engineers can be thought of as being
perfectly inelastic in the short run.
2.
Students are very myopic when they are
considering whether to become engineers.
20
4. POLICY APPLICATION: PAYROLL
TAXES
 Payroll
taxes on employers are heavily used in the
social insurance area. With our simple labor model,
we can show that the party making the social
insurance payment is not necessarily the one that
bears the burden of the tax.
Tax is a fixed dollar amount X.
D0→D1 with vertical distance of X.
pt. A: excess supply→ real wage↓
Employees bear part of the burden of the
payroll tax in the form of lower wage
rates and lower employment levels.
Tax
Real Wage
S0
W0+λ
W1+X
W0
W1
D0
D1
E2 E1 E 0
Employment
Note: In general, the extent to which the
labor supply curve is sensitive to wages
determines the proportion of the employer
payroll tax that gets shifted to employee’s
21
wages.
PAYROLL TAXES AND SUBSIDIES
 Payroll
taxes assessed on employers lead to a
downward, parallel shift in the labor demand curve.

The new demand curve shows a wedge between the amount
the firm must pay to hire a worker and the amount that
workers actually receive.

Payroll taxes increase total costs of employment, so these
taxes reduce employment in the economy.

Firms and workers share the cost of payroll taxes, since the
cost of hiring a worker rises and the wage received by
workers declines.

Payroll taxes result in deadweight losses.
22
THE IMPACT OF A PAYROLL TAX
ASSESSED ON WORKERS
S1
Dollars
S0
w0 + 1
w1
w0
w1  1
D0
A payroll tax assessed
on workers shifts the
supply curve to the left
(from S0 to S1). The
payroll tax has the
same impact on the
equilibrium wage and
employment regardless
of who it is assessed
on.
D1
23
E1
E0
Employment
THE IMPACT OF A PAYROLL TAX PUT
ON FIRMS WITH INELASTIC SUPPLY
Dollars
S
D0
w0
w0 – 1
A
B
D0
A payroll tax assessed
on the firm is shifted
completely to workers
when the labor supply
curve is perfectly
inelastic. The wage is
initially w0. The $1 payroll
tax shifts the demand
curve to D1, and the
wage falls to w0 – 1.
D1
E0
Employment
24
PAYROLL SUBSIDIES
 An
employment subsidy lowers the cost of hiring for
firms.
 This
means payroll subsidies shift the demand curve
for labor to the right (up).
 Total
employment will increase as the cost of hiring
has fallen.
25
THE IMPACT OF AN EMPLOYMENT
SUBSIDY
S
An employment subsidy
of $1 per worker hired
shifts up the labor
demand curve, increasing
employment. The wage
that workers receive rises
from w0 to w1. The wage
that firms actually pay
falls from w0 to w1 – 1.
w0 + 1
w1
B
w0
A
w1 – 1
D1
D0
E0
E1
Employment
26
5. POLICY APPLICATION: THE IMPACT OF MINIMUM WAGES
 The
standard economic model of the impact of
minimum wages on employment is illustrated in the
following figure:
Note: A minimum wage
Dollars
S
W
W*
D
E
E*
ES Employment
The Impact of the Minimum Wage on Employment
creates unemployment
both because some
previously employed
workers lose their jobs,
and because some workers
who did not find it
worthwhile to work at the
competitive wage find it
worthwhile to work at the
higher minimum wage. 27
THE IMPACT OF MINIMUM WAGES ON THE
COVERED AND UNCOVERED SECTORS
Dollars
Dollars
(If workers migrate to
covered sector)
SU
SC
SU
w
SU
(If workers migrate to
uncovered sector)
w*
w*
DU
DC
E
EC
(a) Covered Sector
Employment
EU EU EU
Employment
(b) Uncovered Sector
If the minimum wage applies only to jobs in the covered sector, the displaced
workers might move to the uncovered sector, shifting the supply curve to the right
and reducing the uncovered sector’s wage. If it is easy to get a minimum wage job,
workers in the uncovered sector might quit their jobs and wait in the covered
sector until a job opens up, shifting the supply curve in the uncovered sector to the
left and raising the uncovered sector’s wage.
28
 Note:
In the absence of a minimum wage, the
migration of workers across sectors equates the
wage in the two sectors. The migration of workers
when the wage in one of the markets is set at the
minimum wage equates the expected wage across
sectors. I.e., the free migration of workers across
sectors ensure that the expected wage in the
covered sector equals the for-sure wage in the
uncovered sector.
29
6. NONCOMPETITIVE LABOR MARKETS
(1)
Monopsony
Because the firm is the only demander of labor in
this market, it can influence the wage rate.
Monopsnoists face an upward-sloping supply
curve. This is because the supply curve
confronting them is the market supply curve.
Note: To expand its work force, a monopsonist must
increase its wage rate, i.e., the marginal cost of
hiring labor excess the wage.
30
NONCOMPETITIVE LABOR
MARKETS: MONOPSONY
 Monopsony
market exists when a firm is the only
buyer of labor.
 Monopsonists
must increase wages to attract more
workers.
 Two
types of monopsonist firms:

Perfectly discriminating

Nondiscriminating
31
PERFECTLY DISCRIMINATING
MONOPSONIST
 Discriminating
monopsonists are able to hire
different workers at different wages.
 To
maximize firm surplus (profits), a perfectly
discriminating monopsonist “perfectly
discriminates” by paying each worker his or her
reservation wage.
32
THE HIRING DECISION OF A PERFECTLY
DISCRIMINATING MONOPSONIST
Dollars
S
A
w*
w30
VMPE
w10
10
30 E*
Employment
A perfectly discriminating
monopsonist faces an upwardsloping labor supply curve and
can hire different workers at
different wages. Therefore the
labor supply curve gives the
marginal cost of hiring. Profit
maximization occurs at point
A. The monopsonist hires the
same number of workers as a
competitive market, but each
worker is paid his or her
reservation wage.
33
NONDISRIMINATING MONOPSONIST
 Must
pay all workers the same wage, regardless of
each worker’s reservation wage.
 Must
raise the wage of all workers when attempting to
attract more workers.
 Employs
fewer workers than would be employed if
the market were competitive.
34
THE HIRING DECISION OF A
NONDISCRIMINATING MONOPSONIST
Dollars
MCE
VMPM
S
A
w*
wM
VMPE
EM
E*
Employment
A nondiscriminating
monopsonist pays the same
wage to all workers. The
marginal cost of hiring
exceeds the wage, and the
marginal cost curve lies
above the supply curve.
Profit maximization occurs
at point A; the monopsonist
hires EM workers and pays
them all a wage of wM.
35
To maximize profits, we know that any firm should hire
labor until the points at which marginal revenue product
equals marginal cost.
MCL
W
MRP = MCL
S
Wages are below marginal
revenue product for a
monopsonist.
WC
Wm
Wm < WC and Em < EC
MRP
L
Em
Ec
36
THE IMPACT OF THE MINIMUM WAGE ON A
NONDISCRIMINATING MONOPSONIST
Dollars
MCE
S
A
w*
w
wM
VMPE
EM E
Employment
The minimum wage may
increase both wages and
employment when
imposed on a
nondiscriminating
monopsonist. A minimum
wage set at w increases
employment to E.
37
(2) Monopoly
A monopoly trying to maximize profits and facing
a competitive labor market will hire workers until
its marginal revenue product equals the wage rate:
MRP = (MPL)(MR) = W
→ (MR/P)(MPL) = (W/P) <1
The demand-for-labor curve for a firm that has
monopoly power in the output market will lie
below and to the left of the demand-for-labor
curve for an otherwise identical firm that takes
product prices as given.
38
MONOPOLY IN THE PRODUCT MARKET:
A REVIEW
 Firms
that have monopoly power can influence the
price of the product that they sell.
 Monopolist
faces a downward sloped market demand
curve for its output and an even lower downward
sloped marginal revenue curve.
39
THE OUTPUT DECISION OF A
MONOPOLIST
Dollars
MC
pM
p*
A
MR
q M q*
D
Output
A monopolist faces a
downward-sloping demand
curve for her output. The
marginal revenue from
selling an additional unit of
output is less than the price
of the product. Profit
maximization occurs at
point A where the
monopolist produces qM
units of output and sells
each unit of output at a
price of pM dollars.
40
Note: The wage rates that monopolies pay are not necessarily
different from competitive levels even though employment levels
are. An employer with a product market monopoly may still be a
very small part of the market for a particular kind of employee, and
thus be a price taker in the labor market even though a price maker
in the product market.
Dollars
A
W
VMPE
MRPE
Em
E*
Employment
The Labor Demand of a Monopolist
41