ECON 2010 Lecture Notes - Lecture 6: Real Wages, Demand Curve, Diminishing Returns
Document Summary
Average real weekly earnings of production workers decreased. Real wages of the least skilled, least educated workers decreased 25 to 30% Best educated, highest skilled workers real wages increased. 3 times the income of a high school graduate. Supply and demand analysis can be used to find the price of labor (real wages) and the quantity (employment) Analysis will consider the number of workers employed, not work hours per year. Firms buy labor to produce goods and services. Macroeconomics look at aggregate levels of employment and real wages. Industrialized countries have enjoyed real wage growth in the 20th century. The rate of real wage growth has stagnated since 1973. Fastest during the 1960s and early 1970s. The number of people with jobs and the percent of the population employed has substantially increased. Assumed non labor inputs are held constant. Adding one worker increases output but by less than the previous worker added.
