 List the four sub-groups that the working age population is divided into by labour market

statistics and the three commonly reported ratios that are derived from the size of each of these
groups.

L = Labour force (E +U)

E = Employed

U = Unemployed

N = Economically inactive (not looking for a job

Ratios

1. Labour force participation rate

a. L/(L + N)
2. Unemployment rate
a. U/L
3. Employment rate
a. E/(L + N)

 Define employment rent. Give some examples of what determines employment rent.

Employment rent is the value of having a job compared to not having one

ER = wage – Reservation wage (next best option) – disutility (inconvenience that work is to you)

Minimum wage was $2, hennery ford paid $5

 What is a labour union

An organisation consisting

 Using both a labour discipline diagram, and a wage-setting curve diagram, predict what would
happen to wages from:
o A cut in the unemployment benefit
o The requirement for employees to have “wearable tech” uniforms, which include
sensors and trackers that will allow employers to know how much effort their workers
are putting into their job tasks.

PHOTO

Real wage = (Wage/Price) Watch week 8 lecture

Price = revenue – costs

The bargaining has shifted in favour of the employer at the expense of the worker and so a larger
fraction of output per worker will be going to the firm owners in the form of real profit per worker.
 In May 2021 the NZ Government introduced the Fair Pay Agreement system that will bring
together employers and unions within a sector to bargain for minimum terms and conditions for
all employees in that industry or occupation. The terms cover all workers in the industry,
whether union members or not, and will be put in place if 10% of a workforce or 1000 workers
request a Fair Pay Agreement. How do you think this change in labour market laws will affect the
wage-setting curve?

It will go down to the right as balhhh