Chapter 4 - Overview of the Labor Market Flashcards
What is the Labor Market?
The market that allocates workers to jobs and coordinates employment decisions is the labor market.
What are the two types of labor markets?
National labor market;
Local labor market;
When does an internal labor market exist?
When a formal set of rules and procedures guides and constrains the employment relationship within a firm.
What is labor force?
All those over 16 years of age who are employed, actively seeking work, or expecting recall from a layoff.
What is unemployed labor?
Those in the labor force who are not employed for pay.
What is total labor force?
Consists of the employed and unemployed.
What is the labor force participation rate?
Labor force divided by population who are above the minimum working age.
What is the unemployment rate?
The ratio of those unemployed to those in the labor force.
When is the labor market described as tight with employers searching for employees?
Most people who want a job are already working, unemployment is low and job vacancies tend to be high.
When is the labor market described as slack with employers cutting back on recruiting new employees, while
the few job vacancies that do exist tend to be filled quickly?
Unemployment is higher due to a reduction in overall hiring relative to a decline in workers quitting and to an increase in layoffs.
What is the earnings of labor?
Decided in the labor market, and act as signals or incentives in the allocation process of labor in the market. The earnings of labor determines income and purchasing power of workers.
What is wage rate?
The price of labor per working hour.
What is nominal wage?
What workers get paid per hour in current dollars.
What is real wage?
Nominal wages divided by some measures of prices, suggest the purchasing power of workers’ nominal wages.
What are the 3 markets that firms face?
- Labor
- Capital
- Product market
