Labor markets vary among occupations, where both supply and demand change to imp
ID: 1223497 • Letter: L
Question
Labor markets vary among occupations, where both supply and demand change to impact the equilibrium wage and the amount of hiring. For example, markets for executive officers find less supply because there are fewer people with such talent. This would be represented by a supply curve farther to the left that yields a greater equilibrium wage. Markets for customer service employees experience supply curves farther to the right. There are many people that 18 Economics What You Need to Know qualify for this type of occupation. Therefore, the wage will be less than what executives earn. The demand for labor affects wages as well. The demand for beginning MBAs (Masters of Business Administration) from prestigious universities is fairly high. This is represented by a demand curve farther to the right, with a greater equilibrium wage. (See Exhibit 5-G.) Contrary, the demand curve is farther to the left for mailroom employees. Only a relative few are required and the wage is lower because employers recognize limits in their productivity in comparison to MBAs. In analyzing labor demand, we must note that demand for any input is a derived demand. So, the demand for labor is derived from the demand for what labor produces. For example, the demand for software engineers is strong when there is a high demand for software. Software engineers would receive greater compensation in this case. Students who seek well-paid occupations should be concerned about the principle of derived demand. Upon graduating, they enter a labor market for the type of work they are prepared to seek. If the demand for what the work produces is great, then they can expect a greater demand for labor. Not all labor markets are good, some have low demand or great supply and thus wages are depressed. And, most but not all labor markets are competitive enough. Single firms that are not sufficiently pressured to pay competitive wages dominate a few markets. As well, a few labor markets are influenced by monopoly labor unions. In these cases, workers unite and attempt to elevate wages above competitive conditions. Finally, there are several cases where dominant firms and unions clash over wages, and collective bargaining between the two units occurs. Despite the potentiality of noncompetitive circumstances, typically America’s labor markets tend to be very much contested by both suppliers and demanders. This is especially true in urban areas where most people live. There are numerous rival firms looking for employees and thousands of people competing for the best jobs.
Please help me write what are the interesting statement in this section and why is it important to know at economics
Explanation / Answer
There are few interesting statement in the section which is required by a learner to know for the basic functioning of economics. These are placed below
1. Labor markets vary among occupations, where both supply and demand change to impact the equilibrium wage and the amount of hiring.
This is the basic demand supply relation which holds true in every aspect of functional economics. Labor demand depends upon the working requirement of the industry. If it is technology oriented industry then the deman for labor is low which it is opposite in case of labor oriented industry. And this will play a major role in evaluating the remuneration of employees
2. Markets for customer service employees experience supply curves farther to the right.
As there is a bunch of customer service employees available in a large number thus the supply curve of labor shifts to the right and this will create excess of supply in the labor market and will lead to fall in wage payments.
3. The demand for beginning MBAs (Masters of Business Administration) from prestigious universities is fairly high.
This is due to the fact that the goodwill created by the prestigious universities is encashed by the students and this will also help the universities to charge high fees from the students. This is a case where high quality of product been charged high prices.
4. In analyzing labor demand, we must note that demand for any input is a derived demand
If any product/service is required as an input to produce further then its demand is dependent on the demand of final good/service produced using the intermediate product.
5. If the demand for what the work produces is great, then they can expect a greater demand for labor
Since employer is concerned about the profits they earn using various resources then they can pay high wages to employees, if the output produced by using there labor been sold at high prices due to high market demand for that particular product, and still been left with handsome profits.
6. a few labor markets are influenced by monopoly labor unions.
Labor union plays an important role in decision making of the company since these unions are formed on the priciples of - United we stand, divided we fall. Thus they can influence the decision of the organization if it is not in the favor of employees.
7. there are several cases where dominant firms and unions clash over wages, and collective bargaining between the two units occurs.
If the two giants collide with each other then the result is only destruction and thus to avoid such instance to happen the two finds the negotiation table to be the best solution and negotiates there interests. This is what happens when there is a dominant firm on the one side and labor union on the other and both collectively bargains to negotiates there terms.
8. There are numerous rival firms looking for employees and thousands of people competing for the best jobs.
It is like one prey and numerous predators. Employers will always in a hunt for best employee(s) whereas an employee is always in a search to better (paying) job opportunity.
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