Chapter 9

• Labour is a derived demand
• Labor is derived from the aggregate demand for goods and services
• Return price for labour are wages
• Aggregate demand: total demand in the market
• Unemployment and economic growth are inversely proportional, as noticed in the business cycle
• Productivity of labor can be derived from:

  Total output/labor input
• The productivity of labor can be affected through factors such as education levels, health of workers, quality of work environment, prior experience, age, etc...
• If productivity of labor falls, demand for labor.rises
• Some laborers can become redundant if Capitol equipment is higher valued than labor.
• If aggregate demand rises, demand for labor also rises to meet the higher overall demand in the market
• If aggregate demand stays the same, however, labor productivity is high, labor will have less demand, however, if labor productivity is low, labor will have a higher demand.
• If aggregate demand is falling, and labor is productive, labor demand will fall, however, if labor productivity is not high, then demand for labor will stay the same, potentially making employees redundant.
• Factors that affect the supply f labor include:

  • Pay levels
  • Working conditions
  • Education, skills, experience requirements
  • Mobility of labor
  • Labor force participation rate
• Human capitol refers to the sum of experience, skill, and education in a country and it affects productivity and occupational mobility. This also means that if a country has less human capitol, skilled immigration will be valued.
• Occupational mobility refers to how mobile an individual is in their career and how easily they could move into other careers.

  Geographical mobility refers to how easily an individual could move geographical areas for a labor role.

  younger individuals usually have less occupational mobility and more geographical mobility since they are "less settled" and vice versa for older people.