ch 17 Flashcards
Nominal Wage
Wage paid per hour, day, week, etc. (Not adjusted for Inflation)
real wage
Purchasing power of the wage (Adjusted for effects of inflation).
Incentive Pay/Pay for Performance
Adopted by firms to tie worker compensation more closely to performance. Both workers and the firm want the firm to survive and be profitable.
Minimum Wage/Living Wage
is a price floor for unskilled labor Implemented with the Fair Labor Standards Act in 1938.
Reasons for High Labor Productivity
- Plentiful Capital
- Access to Abundant Natural Resources
- Advanced Technology
- Labor Quality due to Education, Health and Work Attitude
Purely Competitive
Many firms compete to hire a specific type of labor.
wage taker
employer and employee cannot control the Labor Price/Wage Rate
Monopsony
power exists when there is only one major employer in a labor market
wage maker
the wage rate a firm pays varies with the number of workers it employs
Bilateral Monopoly (Competitive)
a Labor Market with a Monopsony (single buyer of labor) and an Inclusive Industry Union (single seller of labor)
Public – Increase Demand
mainly workers for local, state or federal government. For example, teachers, police, firefighters
Craft (Exclusive) – Restrict Supply
represent skilled workers from one occupation. Plumbers, carpenters, electricians
Occupational Licensing (Employee Associations)
represent skilled workers in a particular profession. For example American Bar Association…
Industrial (Inclusive) – Control Supply
represent mainly workers in one industry. For example the autoworkers or steelworkers…
Collective Bargaining
a process of negotiating rates and other work agreements between the firm and union members.
