This is a short summary of Unit 9 needed for the course macroeconomics for the first year of the study economics and business economics in Utrecht. The summary is based on the book The Economy: Economics for a Changing World and includes illustrations from the book for clarification.
Unit 9 The labour market: wages, profits and
unemployment
9.1 The wage-setting curve, the price-setting curve and the labour market
The nominal wage is the actual amount received by working.
The real wage is the nominal wage with changes in prices taken account for.
Employment rents are needed to keep people motivated.
1. What wage, price and hires they will set.
First the lowest wage is determined by the human recourse department.
Then the price is set by marketing.
Then the production department calculation the people needed to produce
output.
9.2 Measuring the economy: employment and unemployment
You are unemployed when you want/are able to work but can’t find a job.
- Population
Population working age 15-64
o Out of labour
o Labour force
Employed
Unemployed
The participation rate = labour force / working age.
The unemployment rate = unemployed / labour force.
The employment rate = employed / population of working age.
9.3 The wage-setting curve: employment and real wages
By 12% the reservation wage is low, so relatively
low effort by the employee.
By 5% the reservation wage is high, is relative low
effort is being used.
The lower the unemployment rate, the higher the
wages.
9.4 The firm’s hiring decision
The labour productivity = output / total hours.
Human recourses choose the nominal wage, w.
Marketing chooses the price, p.
Production chooses the employment, n.
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller matthijs111186. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $3.75. You're not tied to anything after your purchase.
