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Chapter 5: Nonwage Labor Costs
Chapter 5: Nonwage Labor Costs
employee benefits.
Hiring costs
Hiring costs include the costs associated with:
placing advertisements,
interviewing candidates,
MP of M declines as M increases
MP of H declines as H increases
Optimal mix of M and H
Effect of an increase in
mandated overtime premium
equivalent to an increase in MEH
substitution effect: M increases and H
decreases
scale effect: M and H both decrease
Effect of an increase in
mandated overtime premium
In a more complete model, other effects would occur:
a substitution of capital and other inputs for labor,
increased noncompliance,
PVE = Wo + Z + W1/(1+r).
Optimal employment:
PVP=PVE