Therefore, the reduced employment would generate increased unemployment. If the demand and supplies are extremely elastic and sensitive to the legislation modifications, the increase in unemployment would be tremendous.
In the situation of a monopsony, the monopsonist will tend to correlate his employed staff with the established minimum wage rate. As such, if the government sets a minimum wage higher that his implemented salary, he will also tend to increase the number of employed personnel members. This behavior can be explained by the fact that the monopsonist sees himself in a competitive market.
Occupational Health and Safety Regulation
The Occupational Safety and Health Act of 1970 is the most important document regulating the internal conditions at the workplace. The importance of this act is given by the fact that professional activities often pose greater risks that one would estimate. Ensuring health and safety at the workplace however implies additional costs and may as such negative impact the organizational profits. In response to this challenge, managers implement measures which analyze the marginal cost and benefit of job safety. The measures are considered efficient and without major impacts upon profits when the graphic representation of the marginal cost and benefit intersect.
The level of safety and health can also be determined by the employees or the society - this however considers the access to information. If the employees have easy access to all relevant information, their desired level will correspond to the organization's level relative to profit maximization. If on the other hand, the population does not have sufficient access to information, the health and safety measures implemented by the organization will be reduced.
Government as a Rent Provider
The government possesses a more subtle means of influencing the labor market and this refers to the provision of economic rent to the players in the labor market. The economic rent refers to the difference between the wage paid to an employee and the wage he would accept to still be kept in that respective position.
Chapter 14: Labor Market Discrimination
Gender and Racial Differences
The hourly wages of women increased to 80% those of men and are being currently maintained at constant levels. Differences in earning patterns are also observable between whites and Africa-Americans. In terms of unemployment, the gap has been reduced and few discriminatory practices are still available. Discriminatory practices occur in terms of job distribution. The unequal practices can be explained through different levels of
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