Labor Markets, Poverty, and Income
Labor Markets, Poverty, and Income ECON 22060-002
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This 1 page Class Notes was uploaded by Amy Turk on Friday May 20, 2016. The Class Notes belongs to ECON 22060-002 at Kent State University taught by Dr. Ludmila Leontieva in Spring 2016. Since its upload, it has received 3 views. For similar materials see Microeconomics in Economcs at Kent State University.
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Date Created: 05/20/16
LABOR MARKETS, POVERTY, AND INCOME ● workers are likely to be more if they… ○ work the night shift ○ face a high risk of injury on the job ● if the value of the marginal product of labor is greater than the market wage, the firm should hire additional workers ● minimum wage could lower employment ● in the short-run, as firms hire additional workers, the marginal product of labor decreases ● labor supply curve = a firm’s value of marginal product of labor ● winner-take-all labor market = small differences in human capital translate into large differences in pay ○ likely to occur when technology allows the most talented people to serve broad markets ● marginal product of labor = the additional output a firm gets by employing one additional unit of labor ● in a competitive labor market, a worker’s wage will be equal to the value of the marginal product of labor ● human capital theory = jobs that require more human capital will tend to pay more than other similar jobs ● if the benefits of an individual receives from a welfare program decrease as their earnings increase, then the welfare program is means-tested ● negative income tax = system under which the gov’t would grant every citizen a cash payment every year, financed by an additional tax on earned income ● labor unions increase the wages of unionized workers but decrease overall economic efficiency ● poverty threshold = the level of income below which the gov’t classifies a family as poor ● in-kind transfers = payments made to low-income families in the form of a good or service ● earned-income tax credit (EITC) = policy where low-income workers receive credits on their federal income tax ● labor demand curve = value of marginal product of labor curve ● since 1980, the growth in real earnings has been the biggest for the top 1% of US earners ● value of marginal product = marginal product times net price
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