Vocabulary list. Topic: factors of production: labor

	1.	input (s) — ресурс, потребляемый в производстве фактор, затраты, издержки
	2.	output (s) — выпуск, продукция, объем производства
	3.	labor — труд, рабочая сила, трудовые ресурсы labor force — рабочая сила, число работающих в отрасли (стране) labor inputs — затраты на труд (заработную плату) labor market — рынок труда, рынок рабочей силы
	4.	individuals — экономические агенты
	5.	wage (s) — заработная плата, pl. фонды заработной платы wages and salaries — заработная плата рабочих и служащих wage rate — ставка заработной платы
	6.	price taker — производитель, не влияющий на рыночную цену; фирмы, принимающие заданные извне цены
	7.	trade-off — обмен, выбор, взаимозаменяемость, соотношение выгод и потерь
	8.	utility — полезность to apply the concept of utility — применять понятие полезности
	9.	marginal — предельный, минимально (экономически) эффективный marginal product — предельный продукт marginal value (revenue) — предельный продукт в денежной форме diminishing marginal product — убывающий предельный продукт
	10.	shift in demand (supply) — смещение спроса (предложения); изменение в характере спроса (предложения)
	11.	substitution effect — эффект замещения
	12.	curve — кривая the curve is downward (upward) sloping; the curve slopes downward (upward) — кривая имеет отрицательный (положительный) наклон; кривая имеет понижающийся (повышающийся) / нисходящий (восходящий) вид; график убывает (возрастает)
	13.	to employ — нанимать, предоставлять работу syn. to hire employer — работодатель employee — лицо наемного труда, служащий self-employed — самостоятельно занятые (мелкие предприниматели, кустари, лица свободных профессий)
	14.	equilibrium — равновесие, состояние равновесия equilibrium point — точка равновесия equilibrium wage — равновесная заработная плата to bring supply and demand in equilibrium — уравновесить спрос предложением the market is in equilibrium — на рынке достигнуто равновесие
	15.	to be derived from — иметь производный характер
	16.	determinants — неценовые факторы
	17.	shortage — дефицит, нехватка
	18.	surplus — избыток
	19.	labor union (AmE) — профсоюз syn. trade union (BrE)
	20.	to bargain over smth — вести переговоры о чем-либо collective bargain — ведение переговоров (между профсоюзами и предпринимателями) о коллективных договорах
	21.	fringe benefits — дополнительные к зарплате формы вознаграждения
	22.	to retire – уходить на пенсию
	23.	grievance — трудовой конфликт, жалоба (рабочих, персонала) to settle grievances — улаживать трудовые конфликты
	24.	seniority (AmE) — трудовой стаж, выслуга лет
	25.	to lay off — увольнять layoffs — увольнения
	26.	lockout — локаут (вид промышленного конфликта)

■ Ex. 1. Read the text and say which of the following terms were not mentioned.

labor force, customer surplus, opportunity cost, variable costs, marginal product of labor, externalities, shortage, customs union, equilibrium wage, market power, efficiency wages, fringe benefits, price elasticity, utility, labor union, working conditions.

■ Ex. 2. Read the text again and find the terms to match the following definitions.

B) the claim that, other things equal, the quantity demanded of a good falls when the price of the good rises

C) a graph of the relationship between the price of a good and the quantity supplied

D) the property whereby the marginal product of an input declines as the quantity of the input increases

F) the quantity of goods and services produced from each hour of a worker’s time

H) a worker association that bargains with employers over wages and working conditions

Firms produce goods and services using inputs such as labor, land and capital. These inputs are called the factors of production. Labor is the most important factor of production because workers receive the major part of the total income earned in all the economies of Europe and North America.

Many of us earn our living by working. Our job occupies at least a third of our waking hours. To a great extend it defines us, which means that work is more than the way we get income. It is part of our social and cultural makeup. If we lose jobs, we lose part of our identity. What kind of job would you like? Would you start a business of your own or work for someone else? Whatever your goals, some day you will likely enter the labor force and come on to the labor market.

A labor market is a factor market in which individuals supply labor services for wages to other individuals and to firms that need (demand) labor services. As in case of product markets the prices paid for labor services, wages or salaries, are important determinants of the amount of labor demanded and supplied over a given period of time.

To understand labor demand it is important to make two assumptions about the firms that hire the labor and use it to produce goods and services for sale. First, the firm is competitive in both markets where it is a seller and where it is a buyer. A competitive firm is a price taker. It takes the price and the wage as given by market conditions. Secondly, the firm is profit-maximizing. Its supply of goods and services and the demand for workers are determined only by its primary goal of maximizing profit.

Labor supply cannot be considered without taking into account trade-offs that people face in their lives, especially trade-offs between labor and leisure. What do you give up to get an hour of leisure? You give up an hour of work, which in turn means an hour of wages. In other words the labor supply curve reflects how workers’ decisions about labor-leisure trade-off respond to a change in the opportunity cost. As the wage rate increases the cost of not working or the opportunity cost also increases. This is called the substitution effect. But time is limited and eventually people will not work more hours no matter how high the wage rate is.

The theory of consumer choice and the concept of utility can also be applied in the analysis of labor demand and supply. In the labor market like in any other market for products and services, the utility of a purchase is of great importance for consumers. Utility is the term economists use for the satisfaction consumers receive from items they acquire, activities they engage in, or services they use. The utility firms want to get from their purchase of labor is output. Other things equal, an increase in the output leads to buying more labor.

When the firms decide what quantity of labor to hire they think at the margin. Technically the margin, as it is used in economics, refers to the very next unit. To take a step towards this decision the firms consider the increase in the amount of output from an additional unit of labor that is the marginal product of labor. However, as the number of workers increases, the marginal product of labor declines. This property is called the diminishing marginal product. Competitive profit-maximizing firms hire workers up to the point at which the value of marginal product of labor equals the wage.

It is reasonable to expect the laws of supply and demand to prevail in labor markets as they do in product markets. The lower the wage, the greater the quantity of labor services demanded by employers. The demand curve for labor services is therefore downward sloping. The higher the wage, the greater the quantity of labor services supplied. At the equilibrium wage or when the market is in equilibrium, each firm has bought as much labor as it finds profitable. This means that all workers willing and able to work will find jobs, while all employers willing and able to hire workers at that wage will find them available. There is neither a shortage of labor services nor a surplus.

However, the labor market is different from other markets, because the demand for labor is derived from the demand for the product that labor is used to produce. Most labor services are inputs into the production of other goods. Thus, the demand for petrol station attendants is inextricably tied to the supply of petrol. When a business using a particular type of labor enjoys an increase in orders for its products, it will have to hire more labor to fill those orders. In this case an increase in demand for labor will increase wages which in their turn will make work more attractive to workers and cause an increase in the supply of labor. Workers respond to higher wages by increasing the quantity of labor supplied. Conversely, a decrease in orders for products will cause a decrease in the demand for labor. This will put downward pressure on the wages and decrease the quantity of labor supplied.

The shifts in labor demand and supply may be caused by many economic factors such as productivity and non-economic factors such as the development of new technologies, immigration, changes in tastes, government legislation and various types of discrimination. Discrimination occurs when the marketplace offers different opportunities to similar individuals who differ only by race, sex, age or other personal characteristics. Technological advance raises the marginal product of labor, which in turn increases labor demand. Technology has created the need for a highly trained labor force and changed the types of labor demanded decreasing the demand only for certain obsolete skills.

To understand the wide variation in earnings that are observed in real life it is necessary to go beyond the general theory of the labor market. For some workers wages are set above the level that brings supply and demand into equilibrium. There are three reasons why it might be so: the minimum wage laws imposed by the policy makers (the government), efficiency wages paid by firms in order to increase worker productivity, and the market power of labor unions.

A union is a worker association that bargains with employers over wages and working conditions. Unions often raise wages above the level that would prevail without a union. The agreements established between the management and the union cover the whole range of issues relating to employee compensation, including fringe benefits, working hours, work rules, holidays, and retirement age. Other important issues are wage increments for overtime work and procedures for settlement of employee grievances. Unions are also very sensitive to the issue of seniority. It is usually used as a basis for determining promotion union work rules and priority for laying off workers during the periods of declining demand. The workers with the highest seniority are laid off last and are recalled first when business conditions improve. There is often considerable give and take in collective bargaining sessions. Employers are frequently willing to meet union demands for higher wages and improved fringe benefits in return for changes in work rules designed to increase labor productivity. Sometimes the negotiating process reaches a stalemate. When it occurs, there are a number of alternatives. The union and the management can submit to a process by which a third impartial party settles their disputes, that is to arbitration. In other cases the government offers to mediate in the industrial dispute and sends a government official as a mediator. The last resort is a strike. Sometimes employers themselves shut down the plant, resulting in a lockout of workers to pressure the union to accept their offer.

8. What might raise a worker’s wage above the level that balances supply and demand?

10. What usually underlies the priority for laying off workers when the demand for labor declines?

■ Ex. 4. Say whether the following statements are TRUE or FALSE according to the text.

2. The supply of labor services available depends on the opportunity cost of work.

8. Technological advances lead to an increase in total output and a need for more workers to produce it.

■ Ex. 5. Fill in the gaps in the text with the sentences given below. Give a suitable title to the text.

The analysis of the labor market is built with the tools of supply and demand. In doing so, we assume that the labor market is competitive. …(1)….So each buyer or seller has a negligible effect on the wage.

Yet imagine the labor market in a small town dominated by a single large employer. …(2)…. Such a market in which there is a single buyer is called a monopsony.

A monopsony (a market with one buyer) is in many ways similar to a monopoly (a market with one seller). …(3)…. By reducing the quantity offered for sale, the monopoly firm moves along the product’s demand curve, raising the price and also its profits. …(4)…. By reducing the number of jobs available, the monopsony firm moves along the labor supply curve, reducing the wage it pays and raising its profits. …(5)…. In both cases the existence of market power distorts the outcome and causes deadweight losses.

In the real world, monopsonies are rare. In most labor markets, workers have many possible employers, and firms compete with one another to attract workers. In this case, the model of supply and demand is the best one to use.

A) Recall that a monopoly firm produces less of the good than would a competitive firm.

B) That is, we assume that there are many buyers of labor and many sellers of labor.

C) Similarly, a monopsony firm in a labor market hires fewer workers than would a competitive firm.

D) That employer can exert a large influence on the going wage, and it may well use that market power to alter the outcome.

E) Thus, both monopolists and monopsonists reduce economic activity in a market below the socially optimal level.

■ Ex. 6. Make a presentation in Power Point on one of the following topics using the necessary charts and examples.

3) The trade-offs between work and leisure. Backward sloping labor supply curve.