Question

help please

Option 4 labor I guess I don't have a particular question to pose, but any news story related to labor market developments, unions, contract negotiations, worker-owned firms, wages, benefits, studies of the effects of minimum wages, changing labor conditions, etc. would be fine to discuss.

Answer 1

At present, the world is dealing with the deadly pandemic called Covid 19. Economic consequences of the pandemic have been utterly disastrous.

Labour markets has been one of the worst hit. Labour market shrinked as a result of the fall in aggregate demand.There were lay offs. Jobs also disappeared. On the other hand, quarantine and the spread of panic prevented people from going to work. The main effects of can be summarised as follows.

> There was huge fall in demand for Labour.

>There was also a reduction in Supply of labor but it was less compared to the fall in demand for labour.

Let's just try to assess the impact of these developments using a simple supply-demand analysis. Let DL be the demand curve for labour and SL be the Supply curve of labour. Intersection of these two curves leads to the establishment of the equlibrium wage W and Quantity of labourers employed is Q.

Now, as a result of fall in Labour Supply and labour demand these curves shift to left to SL1 and DL1. Intersection of SL1 and DL1 leads to a reduction in equilibrium wage from W to W1 and quantity of labour employed is also reduced from Q to Q1.

Now, we are on the path of recovery. But it will take time. Goverment and central bank have announced their own policy measures. Fed chairman Jerome Powell has recently announced that labour market has a long way to go to recover even with two strong months of job creation. The effectiveness of the stimulus package by goverment the government and rate cuts by the Central Bank in reviving labour market is yet to be known.

.