Labor supply, population, growth and wages

• Labor force is defined as the people who are willing and able to work
• Unemployment rate = number unemployed / labor force x 100%
• a person is unemployed if he or she is willing and able to work, actively looking for a job but no suitable job available
• Labor force participation rate is the percentage of the total population over 15 years of age
• Labor force participation rate = (Labor force/Civilian Non-Institutionalized population) x 100
• Civilian non-institutionalized population is everyone living in the Philippines who is 15 or older except inmates of institutions such as prisons, home for the aged, and mental hospitals
• Underemployment is a situation where employed persons express their desire to have an additional hours of work in their present job, or to have additional job, or to have a new job with longer working hours
• Labor supply is the number of hours people are willing and able to supply at a given wage rate
• Labor supply is the number of workers willing and able to work in a particular job or industry for a given wage
• in labor supply, if the wage increases, workers are usually attracted to work more hours
• Employment sectors in the Philippines:

  1. Agricultural sector
  2. Industrial sector
  3. Service sector
• Categories of workers:

  1. Wage and salary
  2. Self-employed
  3. Employers
  4. Unpaid family workers
• Unpaid individual workers is an individual who work for his family business without pay
• Classification of workers:

  1. Full-time workers
  2. Part-time workers
• Self-employed is an individual who works for himself/herself instead of working for an employer
• Wage and salary are classified as those who work for private households, private establishments, government or government owned and controlled corporation, and those who work with pay in own family-operated business
• full-time workers are workers who work for 40 hours or more in a week
• Part-time workers are workers who work for less than 40 hours a week
• substitution effect is when the wage rate increases, leisure becomes more expensive than other goods that workers might purchase
• labor demand refers to the number of hours that an employer is willing to pay based on current market price of labor
• The income effect of higher wages would lead more workers to work less, while those receiving lower wages would lead more workers to work more. But with lower wages, it reduces the income of workers that would lead them to look for additional income to maintain the family's standard of living
• Labor surplus is an economic condition in which the supply of labor is greater than the demand for labor
• Labor shortage is an economic condition in which supply and labor is less than the demand for labor
• Population growth refers to an increase in the number of people living in a country, province, or city
• Resource market is a place where the business owner purchase all the resources needed in producing goods and services
• Product market is a place where consumers, businessmen, and all the public sector purchase finished goods and services
• Labor market is the place where workers and employers interact with each other
• Positive effects of population growth

  1. Increase in labor market
  2. Increase in demand for goods and services
  3. Price stability
• Negative effects of population growth

  1. Poverty and Inequality
  2. Economic growth
  3. Education
  4. Unemployment
  5. Rural-urban migration
  6. High cost of living
  7. Social Problems
• Wage is a monetary remuneration computed on hourly, daily, weekly or piece work basis paid by an employer to an employee in exchange for work done
• Minimum wage is applicable per region, province, and industry sector as stated in the wage localization act, republic act no 6727
• overtime pay is an additional amounts paid to employees who work more than 40 hours in a workweek
• wage differential refers to the difference in the wages between workers with different skills in the same industry or localities or between workers with the same skills in different industries or localities
• In vacation leave, 13 vacation days, with additional 1 vacation day every year starting on the second year of service and convertible to cash at the end of each year
• In maternity leave, a pregnant employee is entitled to a maternity leave benefit for 105 days and 78 days for a caesarian delivery
• Separation pay is the amount due to the personnel where the termination of employment is due to causes authorized by law
• Retirement pay is the amount to be paid to the employee who has reached the compulsory retirement age or who availed of voluntary retirement
• Factors that may change labor demand:

  1. Increase in demand and goods
  2. During recession
  3. Changes in technology
• Minimum wage is the lowest remuneration that employers may legally pay to workers
• Minimum wage is the monetary remuneration computed on hourly, daily, weekly, or piece work basis paid by an employer to an employee in exchange for work done