Transcript Chapter3
Chapter 3 Labor Demand McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. 2010/10/03 工商時報 台灣歐肯係數 四小龍最小 u = a -0.1(Y/Y ) • 主計處研究:現階段我國歐肯係數約在0.10～0.16之間， 即經濟成長每提升1%，只能降低失業率0.10%～0.16%。 亞洲四小龍最小，顯示台灣GDP成長對改善失業的效果， 相對較低: • 金融海嘯前（97年第1季）台灣的歐肯係數為0.11， 係數低於美、德、英等14個先進國家。 • 97年第1季新加坡的歐肯係數為0.17、香港0.23、南韓0.35。 • 台灣致力發展高科技產業，雖能創造GDP，但由於所能提 供的就業機會非常有限。 3-2 Firm: Profit Optimization • Assume: Supply of each factor is fixed. • Assume markets are competitive: each firm takes W, Re, and P as given. P = price of output, W = nominal wage, Re= nominal rental rate W /P = real wage (measured in units of output), /P= real rental rate Re Max PF ( K , N ) Re K WN FOC wrt K: P MPk Re FOC wrt N: P MPN W 3 3-3 Demand for labor: A derived demand hire workers if P MPN W Value of Marginal Product (VMPN ) VMPN P MPN : Demand for labor W in real terms : MPN w P Pr ofit Maximization (FOC Y): P ? MC 4 3-4 Total Product, Marginal Product, and Average Product Curves 140 25 Average Product 120 20 Output Output 100 80 Total Product Curve 60 15 10 40 5 20 0 Marginal Product 0 0 2 4 6 8 10 Number of Workers 12 0 2 4 6 8 10 12 Number of Workers 3-5 Labor Demand Curve =VMPE 38 VAPE 22 VMPE 1 4 8 Number of Workers 3-6 SR Hiring Decision (summary) • Value of Marginal Product: VMPE= P*MPE • A profit-maximizing firm hires workers up to the point where the wage rate equals the value of marginal product of labor. • The demand curve for labor indicates how many workers the firm hires for each possible wage, holding capital constant. • The labor demand curve is downward sloping. This reflects the fact that additional workers are costly due to the law of diminishing returns. 3-7 P ↑ SR Labor Demand ↑ 22 18 VMPE VMPE 8 9 12 Number of Workers 3-8 Critiques of Marginal Productivity Theory • A common criticism is that the theory bears little relation to the way that employers make hiring decisions. • Another criticism is that the assumptions of the theory are not very realistic. • However, employers act as if they know the implications of marginal productivity theory (hence, they try to make profits and remain in business). 3-9 SR Demand Curve for the Industry Wage Wage T D 20 20 10 10 D T 15 Firm 28 30 Employment 30 56 60 Employment Industry 3-10 LR Employment Decision • In LR, firm maximizes profits by choosing how many workers to hire AND how much plant and equipment to invest in. 3-11 Isoquant Curves Capital X K Y q1 q0 E Employment 3-12 Isocost Lines Capital C1/r C0/r Isocost with Cost Outlay C1 Isocost with Cost Outlay C0 C0/w C1/w Employment 3-13 Firm's Optimal Combination of Inputs: minimize costs Capital C1/r A C0/r P 175 B q0 100 Employment 3-14 Cost Minimization • Profit maximization implies cost minimization. • The firm chooses the least-cost combination of capital and labor. • This least-cost choice is where the isocost line is tangent to the isoquant. • Marginal rate of technical substitution equals the ratio of input prices, w / r, at the least-cost choice. 3-15 LR Demand for Labor: (-)vely sloped • wage↓: two effects 1. Substitution Effect: the firm utilizes cheaper labor to substitute more expensive factor K even if holding output constant. → N↑, K↓ 2. Scale Effect: the firm expanding production → N↑, K↑ Total effect: W↓ → N↑ 3-16 SR vs LR Demand Curves for Labor Dollars Short-Run Demand Curve Long-Run Demand Curve Employment 3-17 2 Special Cases of Isoquants Capital Capital 100 q 0 Isoquant q 0 Isoquant 5 200 Employment 20 Employment Fig Left: Capital and labor are perfect substitutes if the isoquant is linear Fig: Right: The two inputs are perfect complements if the isoquant is rightangled. 3-18 The Demand Curve for a Factor of Production is Affected by the Prices of Other Inputs Price of input i Price of input i (a) (b) D0 D1 D0 Employment of input i D1 Employment of input i The labor demand curve for input i shifts when the price of another input changes. (a) If the price of a substitutable input rises, the demand curve for input i shifts up. (b) If the price of a complement rises, the demand curve for input i shifts down. 3-19 Elasticity of Substitution • Elasticity of substitution：替代彈性 ( K N ) (W ) r • Cross-elasticity of factor demand：交叉彈性 (K (W K W ) ) 3-20 Affirmative Action Black Labor Q P q* White Labor 3-21 Marshall’s Rules • Labor Demand is more elastic when: – The elasticity of substitution is greater. – The elasticity of demand for the firm’s output is greater. – Labor’s share in total costs of production is greater. – The elasticity of supply of other factors of production such as capital is greater. 3-22 Factor Demands given several inputs • many different inputs: – Skilled and unskilled labor – Taiwan and foreign labor – Old and new machines Capital-skill complementarity hypothesis: If subsidies to investment: DK ↑ Demand for skilled vs. unskilled worker? 3-23 Labor Market Equilibrium Dollars Supply whigh w* wlow Demand ED E* ES Employment 3-24 Minimum Wages in the United States, 1938-2007 Nominal Minimum Wage Ratio Min. Wage to Avg. Mfg. Wage 7 0.6 6 5 Ratio 0.5 4 0.4 3 2 0.3 Nominal Wage 1 0 1938 0.2 1944 1950 1956 1962 1968 1974 1980 1986 1992 1998 2004 2010 Year 3-25 The Impact of the Minimum Wage on Employment Dollars S w w* D E E* ES Employment 3-26 The Impact of Minimum Wages on the Covered and Uncovered Sectors Dollars Dollars SU (If workers migrate to covered sector) SC SU w SU (If workers migrate to uncovered sector) w* w* DU DC E EC Employment EU EU EU Employment (b) Uncovered Sector (a) Covered Sector 3-27 Asymmetric Variable Adjustment Costs Variable Adjustment Costs C0 -25 0 +50 Change in Employment Changing employment quickly is costly, and these costs increase at an increasing rate. If government policies prevent firms from firing workers, the costs of trimming the workforce will rise even faster than the costs of expanding the firm. 3-28 Variable adjustment costs: Slow Transition to a New Labor Equilibrium Employment 150 B 100 50 A C Time 3-29 Problems with Estimating Labor Demand S0 Dollars S1 Z P w0 R w2 Z Q w1 D1 D0 E0 E1 E2 Employment 3-30