Chapter Ten: Wage Determination

Chapter Ten: Wage Determination

10.1 Changing Paradigm: From Output Market to Input Market (02:20)
This clip introduces the resource markets that will be the focus of this chapter.
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10.2 Marginal Revenue Product of Labor (04:11)
This clip introduces the concept of marginal revenue product (MRP) of labor and numerically shows how to compute the MRP. The difference between MRP and marginal revenue (MR) is clarified.
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10.3 Marginal Resource Cost of Labor for a Wage Taker (02:26)
This clip introduces the concept of marginal resource cost (MRC) of labor which equals the prevailing wage rate for a wage-taking firm. The difference between MRC and marginal cost (MC) is clarified.
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10.4 Profit-Maximizing Rule for Labor Hiring (02:42)
This clip introduces the profit-maximizing rule for labor hiring: MRP = MRC. The difference between profit-maximizing labor hiring (MRP = MRC) and profit-maximizing output quantity (MR = MC) is elucidated.
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10.5 Labor Demand Schedule in a Competitive Labor Market (02:03)
This clip explains why the marginal revenue product curve of labor is the labor demand curve of a wage-taking firm.
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10.6 Labor Demand Shifter #1: Product Demand (01:38)
This clip explains how a change in the demand for a product that a type of labor helps produce affects the demand for the labor.
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10.7 Labor Demand Shifter #2: Labor Productivity (02:22)
This clip explains how a change in labor productivity affects the demand for the labor.
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10.8 Labor Demand Shifter #3: Prices of Substitute Inputs (03:17)
This clip discusses the substitution and output effects on labor demand when there is a change in the price of an input that is substitutable for labor.
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10.9 Labor Demand Shifter #4: Prices of Complementary Inputs (02:06)
This clip discusses the output effects on labor demand when there is a change in the price of an input that is complementary for labor. Since the two inputs are complementary, there is no substitution effect.
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10.10 Wage Elasticity of Labor Demand (02:28)
This clip introduces the concept of wage elasticity of labor demand and shows that the effect on a firm’s wage payment from a change in wage rate depends crucially on whether the demand for labor is elastic or inelastic with respect to wage.
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10.11 Factor Affecting Wage Elasticity: Resource Substitutability (01:44)
This clip explains why and how the degree of substitutability between labor and other inputs can affect firms’ wage elasticity of demand for labor.
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10.12 Factor Affecting Wage Elasticity: Product Demand Elasticity (02:05)
This clip explains why and how the elasticity of demand for the product in which labor helps produce can affect firms’ wage elasticity of demand for labor.
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10.13 Factor Affecting Wage Elasticity: Ratio of Labor Cost to Total Cost (02:14)
This clip explains why and how the ratio of labor cost to total cost of production can affect firms’ wage elasticity of demand for labor.
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10.14 Wage Determination and Optimal Labor Hiring in a Competitive Labor Market (01:44)
This clip explains how the market wage rate is determined in a competitive labor market, and how an individual wage-taking firm decides its profit-maximizing labor hiring.
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10.15 Wage Determination and Optimal Labor Hiring in Monopsony (03:39)
This clip explains how a monopsony determines its profit-maximizing labor hiring and the wage it pays.
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10.16 Profit Maximization: Monopoly vs. Monopsony (03:54)
This clip contrasts the monopoly model discussed in chapter eight and the monopsony model discussed here. The comparison makes clear the mirror images of the two profit-maximization models: output space vs. input space.
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10.17 Union Models: Introduction (1:32)
This clip provides a brief introduction to the union models to be discussed.
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10.18 Craft Unions (3:34)
This clip explains how an exclusive union can restrict labor supply and, thus, affect labor wage and employment for its members.
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10.19 Industry Union (03:52)
This clip explains how an inclusive union can make wage demands and, thus, affect labor wage and employment for its members.
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10.20 Effects of Unions on Wage and Employment (01:26)
This clip details the effects of exclusive and inclusive unions on wage and employment.
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10.21 Explaining Wage Differentials (04:56)
This clip identifies major causes for wage differentials among individuals and occupations, considering both the supply-side and demand-side factors.
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10.22 The Minimum Wage Controversy (3:19)
This clip provides a brief debate on the effect of minimum wage regulations on labor employment. In particular, it shows that the imposition of a binding minimum wage can cause labor employment to decrease or increase, depending on whether the labor market is competitive or monopsonitic.
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