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Text I: The Supply of Labor

The supply of labor comes from individual households. Each member of a household must determine whether to give up a certain number of hours each day to work .That decision is the individual's labor supply decision and is called the labor-leisure tradeoff.

There are only twenty-four hours in a day, and people have to decide how to allocate this scarce time. They realiy have only two options: they can spend their time (1) working for pay, or (2) not working. Any time spent not working is called leisure time. Leisure time includes being a "couch potato," serving as a volunteer coach for your daughter's first-grade soccer team, volunteering to serve food at St. Jude's food bank, or participating in any other activity except working at a paying job. People want leisure time. Although most people enjoy aspects of their jobs, most would rather have more leisure time and less work time. However, people must purchase the desired good, leisure, by forgoing the wages they could earn by working. As wages increase, the cost of leisure, time increases, causing people to purchase less leisure. Purchasing less leisure means working more.

The number of hours that people are willing and able to work rises enjoy a little more leisure. When the price of leisure increases—in other words, when the as the wage rate rises, at least until people say, "I have enough income; perhaps I'll wage rate increases—people choose to work more. But, as the wage rate increases, some people choose to enjoy more leisure time. They now have more income with which they can purchase all goods and services, including leisure time. Thus, a wage increase has two opposing effects: one leads to increased hours of wprk and one leads to decreased hours. This means that the quantity of labor supplied may rise or fall as the wage rate rises.

But not all economists agree with the idea that people trade off work and leisure. There is no doubt that few have the luxury of deciding each minute whether to work or take leisure time. Some might be able to choose between part-time and full-time work, but full-time work usually means eight hours a day, and part-time work typically means lower-quality j obs and much less pay per hour than the full-time job. Most people, then, are unable to choose how much to work on a day-to-day basis depending on their preferences for leisure that day. But over a month, a year, or several years, people do choose to put in more or less time on the job. Some people choose occupations that enable them more flexibility; many prefer to be self-employed in order to be able to choose whether to put in more or less time on the job. People can also moonlight, work an additional job or put in extra hours after the full-time job is completed.

When you enter the labor market, you offer various levels of services at various wage rates. The decision about whether to offer your labor services for employment is a decision about labor force participation, joining the work force in the United States. People over the age of sixteen who are actively seeking a job are said to be members of the labor force. These are the people who have chosen to offer their labor services for employment at specific wage rates. As the wage rate increases, the number of people participating in the labor force increases.



In fact, workers are not the same, jobs are not the same, and wages are definitely not the same. College-educated people earn more than people with only •a high school education, and people with a high school education earn more than those with only a grammar school education. Older workers earn more than younger workers. Men earn more than women. Whites earn more than non-whites. Unionized workers tend to earn more than nonunionized workers. The labor market model also suggests that workers will be paid their marginal revenue products. The more productive a worker is, the higher his or her compensation will be, and vice versa. This relationship does not always hold in the real world, however. There are large salary differences for people with similar levels of productivity, and people who are vastly different in terms of productivity are paid the same.

Exercises

I. Learn the vocabulary:

Labor demand (supply), individual household, to purchase the desired good, the

wage rate, labor force participation, to enter the labor market,

//. Explain the meaning the meaning of the following words and word-

combinations:

Labor-leisure trade off, leisure time, to have part-time job, to have full time job, to

have flexible working hours (to be on flexi-time), to work in shifts, to be self-

employed, to moonlight, unionized (nonunionized)workers, marginal revenue

products.

///. Answer the following questions:

1 . How can people allocate their time?

2. What does leisure time include?

3. Are people willing to work more hours for higher wages? Why?

4. When does the number of people participating in the labour force increase?

5. What does the labor market model suggest?

IV. Render the article briefly.


Date: 2016-01-03; view: 688


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