LABOR MARKET Kuliah 12

THE LABOR MARKET..1  When firms respond to an increase in demand by stepping up production : Higher production requires an increase in employment Higher employment leads to lower unemployment Lower unemployment puts pressure on wages

THE LABOR MARKET..2 higher wages increase production costs, forcing firms in turn to increase prices Higher prices leads workers to ask for higher wages, and so on

FUNGSI PRODUKSI…..1  menyatakan hubungan antara kuantitas faktor input (seperti jumlah tenaga kerja yang digunakan) dan kuantitas maksimum dari output yang dapat diproduksi dengan menggunakan input tersebut  Y= F (N, …)  Y= Output Riel  N= Input tenaga kerja

FUNGSI PRODUKSI…..2 Y= F (N, …) N No ∆N ∆Y Yo

FUNGSI PRODUKSI DAN PRODUK MARGINAL TENAGA KERJA (MPN)  Gambar sebelumnya memperlihatkan adanya diminishing return. Kenaikan tenaga kerja berturut- turut akan menghasilkan output tambahan yang semakin berkurang. Produk marginal tenaga kerja diperlihatkan oleh kemiringan fungsi produksi.. ∆Y/ ∆N, yaitu kenaikan output akibat kenaikan per unit tenaga kerja.

PERMINTAAN TENAGA KERJA…1  Perusahaan akan menggunakan tenaga kerja tambahan selama produk marginal tenaga kerja (marginal product of labor/MPN) melebihi biaya tenaga kerja tambahan  Biaya tenaga kerja tambahan ditentukan oleh tingkat upah riel  Tingkat upah riel yaitu upah nominal dibagi dengan tingkat harga

PERMINTAAN TENAGA KERJA…2 Upah riel (W/P) (W/P)o N0N1N2 MPN

PERMINTAAN TENAGA KERJA…3 MPN adalah fungsi yang menurun terhadap besarnya kesempatan kerja karena adanya diminshing returns. Pada tingkat upah riel (W/p)o tertentu, pilihan kesempatan kerja yang optimal adalah No Pada N1 produk marginal tenaga kerja lebih kecil daripada upah riel, sehingga perusahaan akan menghemat dengan mengurangi kesempatan kerja

PERMINTAAN TENAGA KERJA…4  Pada N2 produk marginal melebihi upah riel, sehingga perusahaan akan memperoleh keuntungan dengan mengangkat pekerja tambahan Posisi kesempatan kerja optimal dari perusahaan diwujudkan pada bentuk persamaan berikut : MPN= W/P

KESEIMBANGAN PASAR TENAGA KERJA..1 Kesemppatan keja NS MPN N1N* (W/P) E (W/P)1 (W/P)O

 Kurva penawaran tenaga kerja adalah NS  Kurva permintaan tenaga kerja (MPN)  Equilibrium pasar tenaga kerja dicapai pada tingkat upah riel (w/p)o.  Pada tingkat upah riel yang lebih rendah terdapat kelebihan permintaan akan tenaga kerja  Pada tingkat upah riel yang lebih tinggi terdapat kelebihan penawaran atau pengangguran KESEIMBANGAN PASAR TENAGA KERJA..2

WAGES AND UNEMPLOYMENT…1  W= P* F (u, z) (-, + ) W = Nominal Wages u = Unemployment rate z = a catchall variable P* = Expected price level P* u W W z W

WAGES AND UNEMPLOYMENT…1  L= E+ U L= Labor force E= Employment U= Unemployment  u= U/L  u= Unemployment rate

PRICE DETERMINATION…..1 Prices depend on costs Costs depend on the nature of the production function (relation between the inputs used in production and the quantity of output produced

PRICE DETERMINATION…..2 Y=AN Y= Output N= Employment A= Labor productivity /(Output/Worker) If A is constant (A = 1) Y= N

PRICE DETERMINATION…..3  The production function Y =N implies that the cost of producing one more unit of output is the cost of employing one more worker (Wages)  Using the terminology microeconomics MC = P,……… P equal W  But many goods markets are not competitive,and the firms charge a price higher than their MC

PRICE DETERMINATION…..4  P= (1 + μ ) W  μ= Markup of price over cost If goods market were perfectly competitive, the price would simply equal the cost and μ would equal zero. To the extent that they are not competitive and that firms have market power, the price will be higher than the cost, and μ will be positive

The wage-setting relation  W= P F (u, z)  if dividing both sides by the price level  W/P= F (u, z)  The relation between the real wage and the rate of unemployment, let’s call it the wage setting relation

The Price Setting Relation ….1  if dividing both sides by the nominal wage  P/W= 1+ μ  W/P= 1/ ( 1 + μ)  P= (1 + μ ) W

The Price Setting Relation ….2 Price-setting relation (PS) 1/ (1+ μ) A wage-setting relation WS Un Unemployment rate Real Wage (W/P)

Equilibrium real wages, employment and unemployment…1  F(Un,z)= 1/ ( 1 + μ)  Un= the equilibrium unemployment rate (natural rate of unemployment)

Equilibrium real wages, employment and unemployment..2 Real wage (w/p) 1/ (1+ μ) 1/ (1+ μ’) PS PS’ WS A A’ A’’ Un’’Un Un’

Equilibrium real wages, employment and unemployment..3  An increase in unemployment benefits.an an increase in benefit can be represented by an increase in z: its increase the wage set by wage setters at a given unemployment rate. So it shifts the wage-setting relation up, from WS to WS’. The equilibrium moves from a to A’ and the natural un employment rate increase from Un to Un’

Equilibrium real wages, employment and unemployment..4  Amore stringent antitrust legislation. To the extent that such a legislation decreases the market power of the firms, it leads to a decrease in the mark up -a decrease in the mark up -a decrease in μ. The decrease in μ implies an in crease in the real wage paid by the firms, and so shifts the price -setting relation up from PS to PS’. The Equilibrium moves from A to A’’ and the natural unemployment rate decreases Un to Un’;’

From unemployment to Output…1  u= U/L = (L -N)/L = 1 - N/L  N= L(1-u)  Y=N  Yn=Nn= L (1- Un)…….. The natural level of output  F(1-(Yn/L), z ) = 1/ (1+ μ)  If Un is the natural rate of unemployment, Nn = L(1-Un) is the natural level of employment.

From unemployment to Output..2 LNn U N A PS WS Real wage (w/p) 1/ (1+ μ)