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14.14: Introduction to Wages and Employment in Labor Markets

  • Page ID
    48488
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    What you’ll learn to do: explain how wages are determined when employers or employees hold labor market power

    Image of five miniature men in suits and ties. A large hand is picking up one of the men out of the line.

    In the labor market, employers often hold most of the power in determining wages. This could especially happen if the firm has little or no competition in hiring employees, so workers have little alternative to accepting the wages that are offered. This is call a monopsony, and results in a lower level of employment and a lower equilibrium wage than what would be preferred by the competitive labor market.

    Sometimes, however, the employees hold more of the power in determining wages. This is the case with labor unions, who negotiate wages through collective bargaining.

    Contributors and Attributions

    CC licensed content, Original
    • Introduction to Wages and Employment in an Imperfectly Competitive Labor Market. Authored by: Lumen Learning. License: CC BY: Attribution
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    14.14: Introduction to Wages and Employment in Labor Markets is shared under a not declared license and was authored, remixed, and/or curated by LibreTexts.

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