Scot Wick Blog

  Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 6 The Economics of Labor Markets Chapter 18 of 36 The Markets for the Factors of Production Section 13 of 20 … Trade-off between working and leisure hours Per Figure A at $20 per hour wage: When younger this person is on labor-supply curve S, desires to work 40 hours. When close to retirement this person is on curve S1, values leisure time higher and desires to work only 25 hours This person would work 40 hours only if wage was at least $30. …. One of the Ten Principles of Economics, #1: people face trade-offs. Probably no trade-off is more important in a person's life than the trade-off between work and leisure. The more hours you spend working, the fewer hours you have for leisure activities. The trade-off between labor and leisure is key to the labor supply curve, why it slopes upward. … Another of the Ten Principles of Economics, #2: the cost of something is what you give up to get it. If you give...

  Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 6 The Economics of Labor Markets Chapter 18 of 36 The Markets for the Factors of Production Section 12 of 20 Consider three factors that cause the Figure 3 demand curve for labor to shift. -1- Unit Price -2- Technological Progress -3 - Supply of Other Factors … -2- Technological Progress Between 1960 and 2000 the amount of output a typical U.S. worker produced in an hour rose by 2.4 times. The most important reason for the increase is technological progress. Technological progress raises the marginal product of labor, with a new machine each worker can produce more. This increases the demand for labor, which means the demand curve for labor shifts to the right per Figure 3a. … Technological progress can also decrease labor demand. A new machine in a factory often results in fewer workers needed to produce the amount of product demanded from the company. In this case the demand curve for labor shifts t...