1. Copyright © 2009 Pearson Education, Inc. Chapter 2 Overview of the Labor Market

2. Copyright © 2009 Pearson Education, Inc. 2- 2 Figure 2.5: The Markets in which Firms Must Operate

3. Copyright © 2009 Pearson Education, Inc. 2- 3 Labor Market Internal Labor Market Labor Force Out-of-Labor Force Labor Force Participation Rate Unemployment Rate Primary, Secondary, and Tertiary Sectors Pareto Efficiency Important Definitions - Labor Markets

4. Copyright © 2009 Pearson Education, Inc. 2- 4 Figure 2.1: Labor Force Status of the U.S. Adult Civilian Population, April 2007

5. Copyright © 2009 Pearson Education, Inc. 2- 5 Table 2.1: Labor Force Participation Rates by Gender, 1950-2007

6. Copyright © 2009 Pearson Education, Inc. 2- 6 Figure 2.2: Unemployment Rates for the Civilian Labor Force, 1946-2006 (detailed data in table on next slide)

7. Copyright © 2009 Pearson Education, Inc. 2- 7 Unemployment Rates for the Civilian Labor Force, 1946-2006 (Data displayed Graphically in Figure 2.2)

8. Copyright © 2009 Pearson Education, Inc. 2- 8 Figure 2.3: Employment Distribution by Major Nonfarm Sector, 1954-2007 (detailed data in table on next slide)

9. Copyright © 2009 Pearson Education, Inc. 2- 9 Employment Distribution by Major Nonfarm Sector, 1954-2007 (data displayed graphically in Figure 2.3)

10. Copyright © 2009 Pearson Education, Inc. 2- 10 Nominal Wages Real Wages Consumer Price Index Earnings Payments In Kind Deferred Payments Total Compensation Income Important Definitions - Earnings of Labor

11. Copyright © 2009 Pearson Education, Inc. 2- 11 Table 2.2: Nominal and Real Hourly Earnings, U.S. Nonsupervisory Workers in the Private Sector, 1980-2006

12. Copyright © 2009 Pearson Education, Inc. 2- 12 Figure 2.4: Relationship between Wages, Earnings, Compensation and Income

13. Copyright © 2009 Pearson Education, Inc. 2- 13 Substitution Effect Scale Effect Change In Demand Change in Quantity Demanded Market, Industry, and Firm Labor Demand Long Run vs. Short Run Labor Demand Important Definitions - The Demand for Labor

14. Copyright © 2009 Pearson Education, Inc. 2- 14 Table 2.3: Labor Demand Schedule for a Hypothetical Industry

15. Copyright © 2009 Pearson Education, Inc. 2- 15 Figure 2.6: Labor Demand Curve (based on Table 2.3)

16. Copyright © 2009 Pearson Education, Inc. 2- 16 Figure 2.7: Shift in Demand for Labor Due to Increase in Product Demand

17. Copyright © 2009 Pearson Education, Inc. 2- 17 Figure 2.8: Possible Shifts in Demand for Labor Due to Fall in Capital Prices

18. Copyright © 2009 Pearson Education, Inc. 2- 18 Change in Quantity Supplied Change in Supply Comparable vs. Noncomparable Jobs Market Supply of Labor Supply of Labor to the Firm Wage Taker Important Definitions - The Supply of Labor

19. Copyright © 2009 Pearson Education, Inc. 2- 19 Figure 2.9: Market Supply Curve for Paralegals

20. Copyright © 2009 Pearson Education, Inc. 2- 20 Figure 2.10: Shift in Market Supply Curve for Paralegals as Salaries of Insurance Agents Rise

21. Copyright © 2009 Pearson Education, Inc. 2- 21 Figure 2.11: Supply of Paralegals to a Firm at Alternative Market Wages

22. Copyright © 2009 Pearson Education, Inc. 2- 22 Equilibrium or Market Clearing Wage Disequilibrium Excess Demand and Excess Supply Nonmarket Influences on the Labor Market Collective Bargaining Agreement Economic Rent Reservation Wage Important Definitions - Wage Determination

23. Copyright © 2009 Pearson Education, Inc. 2- 23 Figure 2.12: Market Demand and Supply

24. Copyright © 2009 Pearson Education, Inc. 2- 24 Figure 2.13: Demand and Supply at the “Market” and “Firm” Levels

25. Copyright © 2009 Pearson Education, Inc. 2- 25 Figure 2.14: New Labor Market Equilibrium after Demand Shifts Right

26. Copyright © 2009 Pearson Education, Inc. 2- 26 Figure 2.15: New Labor Market Equilibrium after Supply Shifts Left

27. Copyright © 2009 Pearson Education, Inc. 2- 27 Figure 2.16: New Labor Market Equilibrium after Supply Shifts Right

28. Copyright © 2009 Pearson Education, Inc. 2- 28 Figure 2.17: Effects of an Above-Market Wage

29. Copyright © 2009 Pearson Education, Inc. 2- 29 Figure 2.18: Effects of a Below-Equilibrium Wage

30. Copyright © 2009 Pearson Education, Inc. 2- 30 Figure 2.19: Labor Supply to the Military: Different Preferences Imply Different “Rents”

31. Copyright © 2009 Pearson Education, Inc. 2- 31 Table 2.4: Unemployment and Long-Term Unemployment, Selected European and North American Countries, 2005