Demand for labor under perfect competition. Labor market under conditions of perfect and imperfect competition

The labor market is characterized by everything said above about factor markets in general. Let us consider the specifics of pricing in the labor market under conditions of perfect and imperfect competition.

Perfect competition in the labor market.

In a competitive labor market, on the one hand, there is a large number of firms competing with each other when hiring a specific type of labor, and on the other hand, there are numerous workers who have the same qualifications and independently offer this type of labor service. A competitive market is characterized by the fact that neither firms nor workers have control over the wage rate.

Prices for factors of production, including labor, are determined based on the law of supply and demand. By combining the demand curve and the labor supply curve, the equilibrium wage rate can be determined. The intersection of the labor demand (D L) and labor supply (S L) curves allows us to determine the equilibrium wage rate (W 0). Equilibrium in the labor market means that entrepreneurs who agree to pay wages W 0 find the required amount of labor on the market. In the equilibrium position, all workers who want to work at the rate W 0 find work.

For an individual company, the wage rate W 0 is a given value. Each firm operating in a given labor market hires a small part of the total supply of a given type of labor and cannot influence the wage rate. The labor supply of such a firm is completely elastic. Since the price of a resource is given for an individual competitive firm, the marginal cost of a given resource (MRC) will be constant and equal to the price of the resource (wage rate). It is profitable for a firm to hire workers up to the point at which the current wage rate equals the monetary marginal product of labor (MRP L). The firm maximizes its profits by hiring workers to the point where wage rates and thus marginal labor costs equal their marginal product in monetary terms (Figure b).

Imperfect competition in the labor market.

Perfect competition in the labor market is the exception rather than the rule. Most of these markets are characterized by imperfect competition, the extreme case of which is monopsony, or monopoly, of the buyer. Monopsony- a situation where a company acts as a monopolist in a market where it is a buyer. This situation on the labor market is possible in small towns, where one large enterprise may be practically the only employer. Since in a monopsony one employer represents the majority of the demand for a given type of labor, the employing firm dictates the wage rate. The wage rate a firm pays workers is directly related to the number of workers it hires.

Unlike a perfectly competitive firm, the monopsonist has an upward sloping supply curve. A monopsonist firm will be forced to pay a higher wage rate in order to get more workers. In other words, for a monopsonist firm, the marginal costs of a resource will exceed its price (MRС > W). The costs of an additional employee will exceed the wages of this employee by the amount necessary to bring the wages of previously hired personnel to its new high level. The new wage rate must be paid to both the additional employee and all previously hired employees. On the graph, such a situation will be reflected in such a way that the marginal cost curve will pass above the labor supply curve (see figure).

All other things being equal, the monopsonist maximizes his profits by hiring fewer workers while paying a lower wage rate than would be the case under competition.

In order to maximize profits, the company will follow the rule: MRC = MRP. The intersection of the marginal cost (MRC) and marginal resource return (MRP) curves will determine the market equilibrium of the monopsonist firm. In this case, the number of employees will be L M, and the wage rate will be W M. The wage rate in this situation is determined by the labor supply curve. If this graph illustrated perfect competition, equilibrium would be established at the point of intersection of the labor supply and demand curves. As a result, the number of employees would be L ck, and wages would be w ck.

Labor market represents a socio-economic form of movement of labor (labor resources), corresponding to a system of highly developed commodity relations.

An imperfectly competitive labor market arises as a result of the monopoly power of one of the parties. On the demand side, the source of monopoly power is monopsony, and on the supply side, it is trade unions.

Monopsony– one buyer in the labor market – occurs under the following conditions:

1. The presence of one city-forming enterprise.

2. As a result of the creation of unions of entrepreneurs, within the framework of which agreements are adopted on a unified policy in the field of wages.

3. As a result of the concentration of production, when the firm becomes the only employer of labor.

Monopsony causes wage rates to be set even lower than in equilibrium in a competitive market, and employment declines. In a monopsony, marginal cost (MRCL) is always greater than the wage rate at which a given quantity of labor is hired.

In order to maximize profits, the company will follow the rule: MRC=MRP. The intersection of the marginal cost (MRC) and marginal resource return (MRP) curves will determine the market equilibrium of the monopsonist firm. In this case, the number of employees will be LM, and the wage rate will be WM. Thus, determining the volume of labor and wage rate that is profitable for yourself. This equilibrium ensures the maximum amount of labor on the market. If this graph illustrated perfect competition, equilibrium would be established at the point of intersection of the labor supply and demand curves. As a result, the number of employees would be Lsk, and wages would be Wsk.

Trade union– an organization of employees that is created to represent the interests of workers in concluding contracts with employers regarding wage rates and working conditions. In economic theory, trade unions are viewed as a source of monopoly power on the labor supply side.

The goal of trade unions is to increase the level of well-being of trade union members, as a rule: increasing wages, improving working conditions. In achieving this goal, trade unions can influence the labor market: reduce or expand demand, or limit supply.

There are 2 types of trade unions:

1. Workshop - closed - unites workers of the same profession.

2. Industry - open - unites workers in the industry as a whole.

EXPLANATION OF THE GRAPH (The labor demand curve (DL) shows the marginal returns of firms competing for labor in a given labor market. The labor supply curve (SL) shows how workers would supply their labor if there were no monopoly power in the market union. Under conditions of perfect competition, the equilibrium wage rate would be W ck and Lck workers would be hired. Since the union has monopoly power, the union can choose any wage rate and the corresponding amount of labor. If the union maximized the number of workers hired, then it would choose a situation corresponding to competitive equilibrium. If the union intends to maximize the wage rate, then it will go by limiting the number of its members. The union chooses the number of workers hired in such a way that its marginal income (additional wage) is equal to the additional costs of attracting its members to work. In the figure, this corresponds to the situation where the marginal revenue curve (mr) intersects the supply curve. As a result, under the conditions of the monopoly power of the trade union, LM workers will be hired, whose wages will be Wm.)

In modern labor markets, strong and organized trade unions often clash with equally strong and organized employers. Let's consider the situation bilateral monopoly, a situation where the employer is the only buyer of labor (monopsonist), and the seller of labor (trade union) has monopoly power.

The SL curve represents the supply of labor, and the DL curve represents the firm's demand for labor. If there were perfect competition in the labor market, then the equilibrium wage rate would be Wsk, and the number of hired workers would be L sc. In a non-competitive labor market, a monopsony employer, guided by the MRP = MRC rule, will strive to set wages WH, which is lower than the competitive equilibrium rate, while hiring LM workers. The wage rate cannot fall below this level, since it is already the worst case scenario for workers. The union views the DL demand curve as reflecting the firm's hiring policy based on the wage rate. The MR curve on the graph characterizes the additional salary that the union provides to its members as the number of hired workers increases. The SL curve reflects the union's marginal labor costs. The union will insist on some kind of super-equilibrium competitive wage rate WP. In this case, the wage rate cannot rise higher, since otherwise for the monopsonist the marginal costs of labor will exceed the marginal income from it. Thus, with a slight difference in the number of hired workers, significant differences in wages can be traced in the policies of the trade union and the employer company. It is impossible to say definitely which of these two possibilities (WM or WP) is being realized. Most likely, the result will be intermediate and the wage rate will be set somewhere between WM and WP. The party with greater power and a more effective strategy will be able to force its opponent to accept a wage rate closer to the one it insists on.

Imperfectly competitive market – self-regulation mechanisms do not work fully. General features of this market:

Significant market share (or separate segment) of individual manufacturers,

Barriers to entry into the industry

Heterogeneity of products

Imperfection (inadequacy) of market information.

There are different types of imperfect competition, in which certain features predominate. For example: in monopolistic competition - heterogeneity of products, oligopoly - a significant market share for some producers, monopoly - insurmountable barriers.

The market supply of labor is the sum of individual offers from sellers of labor services. Therefore, first, we need to consider the individual supply of labor, because it is closely related to the behavior of the individual.

Turning to historical sources, I found out that neoclassicists believed that all activities not related to the labor market have direct utility and constitute leisure. Activities related to the labor market have a “negative” utility for the individual, which contributes to the emergence of wages, i.e. income. Income is the main motive that motivates people to work.

Individual labor supply can be depicted graphically (Figure 1).

This individual labor supply curve increases as the price of labor rises. If the wage rate is high, then the person’s desire to work will be high. When the wage rate increases from point W 1 to W 2, the supply curve will increase, although if we consider a further increase in wages, we will notice that the supply curve begins to deviate in the other direction, the opposite, which characterizes a reduction in labor (Figure 2). W 1 is the minimum wage level at which an individual makes the choice to go to work, therefore, this means that the value of W 1 serves as the minimum labor supply price.

In this case, we can proceed from the dynamics of demand for leisure, which is determined by the interaction of two effects, namely:

1) substitution effect;

2) income effect.

Let's look at these two effects. If wages increase, then naturally, leisure time increases, the need for it increases, which leads to a greater loss of one’s income. And since income is an indispensable payment for goods and services for a person and has purchasing power, there is always a need to increase one’s income, which leads to the replacement of free time, i.e. of your vacation. A person increases his income, thereby limiting himself in time for rest, and vice versa, the less a person works, the more time he has for rest, therefore, his income decreases. This is the substitution effect, which acts in the direction of increasing the supply of labor as income increases, and vice versa, decreasing the supply of labor as income decreases.

The income effect is the opposite effect in relation to the substitution effect. If wages increase, then a person immediately has the opportunity to use his income to a greater extent, it becomes possible to consume more and spend more time on leisure, since real wages increase, which means an increase in income for the same or perhaps even at lower labor costs. Thus, the Income Effect works to decrease the supply of labor as income rises and increase the supply of labor as it falls.

There is a direct and inverse relationship between wages and labor supply. That is, if the substitution effect dominates the income effect, then there is a direct relationship between wages and labor supply, but if, on the contrary, the income effect dominates the substitution effect, then an inverse relationship forms between them.

If we talk about the total market supply of labor, we can see that it slopes upward and to the right, since it captures the direct relationship between a given wage and the total supply of labor. The market supply curve for labor is the opportunity cost curve. In order to attract workers to certain jobs, the level of wages must cover the costs of lost opportunities for alternative use of this type of labor. The point of intersection of the labor supply and demand curves determines the equilibrium wage rate and the equilibrium level of employment for a given type of labor (Figure 3a). Looking at Fig. 3b, then the equilibrium wage rate is denoted by W c, and the equilibrium level of employment of this type of labor is denoted by L c. Since this graph depicts studies of a completely competitive labor market, for a certain, each individual company, the wage level will be set by the market. Each individual firm wants to influence the wage rate in its favor, but in this situation this is not possible since the firm hires a small proportion of a given type of labor, therefore. It cannot affect the wage rate. In this case, the supply curve S L is perfectly elastic. Since for a certain company the price for a resource is determined, the marginal cost of the resource will be constant and equal to the wage rate, that is: MRC L =W. By connecting and hiring new labor, the firm can maximize its revenue to the point where the wage level equals the marginal revenue of labor. The equilibrium point, namely, the point L 0, where the marginal revenue of the resource will be equal to the marginal cost of the resource.

Monopsony labor market

Monopolization in the labor market exists both on the demand side and on the labor supply side. In the last section, I considered a perfectly competitive labor market, now we will consider an imperfectly competitive labor market, a monopsony model, a model in which a monopoly is developed, there is one buyer of labor. This model is popular in small villages where there is only one specific company, enterprise, for example, a glass manufacturing plant. A monopsonist is the only firm in the market that is the buyer of a resource offered in this market, and there are either few or no alternative sales opportunities. The monopsonist has sufficient power to influence the price of the resource services it purchases. The characteristic features, as well as mandatory conditions, of a monopsony include:

1) Wages do not depend on the demand for labor and the supply of labor, the enterprise itself dictates the wage rate, workers have the choice of either accepting a given wage or leaving the labor market.

2) The total number of employees at a given enterprise constitutes the bulk of all those employed in any particular type of labor.

3) Since monopsony is mainly developed in small towns and villages, with certain social conditions, it is difficult for workers to get more education and gain knowledge in a new specialty, so this type of labor is not particularly mobile.

4) In this labor market, a significant number of skilled workers interact with a certain main enterprise, or several enterprises that are part of the main enterprise and act as a single employer of labor.

Since under monopsony conditions the enterprise is an industry, the labor supply curve for the enterprise and the aggregate labor supply curve coincide. In the graph, the labor supply curve is the firm's average labor cost curve because the monopsonist pays labor at a specific, uniform wage rate and the industry's marginal resource cost curve. Also on the graph you can trace the wage rate and its changes for one specific worker. The points on the labor supply curve show how the wage rate changes when the company attracts new employees (Figure 4). In order to attract new employees from other industries, the enterprise must increase the wage rate, therefore, on the graph, the labor supply curve will gradually rise. We can conclude that the marginal cost of hiring labor exceeds the average cost. Graphically, it looks like this: the enterprise’s marginal labor cost curve lies above the average cost curve or the labor supply curve (Figure 4). This location of the marginal and average labor cost curves is in accordance with the location of the demand curve and the marginal revenue curve in a monopolized labor market. As written above, the marginal revenue curve is located below the demand curve due to the higher marginal cost curve of the resource compared to the labor supply curve in a monopsony labor market. Under monopsony conditions, the marginal cost of a resource exceeds the price, this can be explained by the following form: MRC L >P L . If a monopsonist enterprise increases the tariff rate in order to obtain new additional units of labor, then it sets a higher wage rate not only for additional units of labor, but also for all existing ones. In a monopsony labor market, the marginal revenue curve of a resource is not a labor demand curve, since it is impossible to construct a demand curve for a monopsony enterprise, just as it is impossible to construct a supply curve for a monopoly. It follows that setting the wage level at W a turns the labor demand curve into a horizontal line up to point d. Therefore, the labor demand curve takes the form of a broken line W a adD (Figure 4). Each firm seeks to maximize profit when it equalizes the marginal revenue received from hiring a new additional unit of labor with the marginal cost of the resource. On the graph you can also notice that a monopsonist enterprise, in order to maximize its profit, will also try to align the marginal cost of the resource with the demand for labor at point b. At this point, the monopsonist will hire L b new workers relative to L c in a perfectly competitive labor market and will pay the wage rate W a as opposed to the competitive rate - W c . On the graph, the intersection of the dotted line drawn from point b to the x-axis determines the wage rate Wa, as well as the labor supply curve or the average labor cost curve, since in a monopsony labor market the supply curve for the industry and the supply curve of the monopsonist enterprise coincide and reflect the average cost of a resource, that is, the level of wages it must pay to each worker.

11.4.1. Perfect competition in the labor market

Perfect competition in the labor market presupposes the presence of four main features:

• 1) presentation of demand for a certain type of labor (i.e., for workers of a specific qualification and profession) by a sufficiently large number of firms competing with each other;
• 2) the offer of their labor by all workers of the same qualifications and profession (i.e., members of some non-competing group) independently of each other;
• 3) the absence of any one association on the part of both buyers of labor services (monopsony) and their sellers (monopoly);
• 4) the objective impossibility of demand agents (firms) and supply agents (workers) to establish control over the market price of labor, i.e. forcefully dictate wage levels.

Let us first consider the dynamics of labor supply and demand in a perfectly competitive market in relation to an individual firm (Fig. 11.8).

The graph shows: under perfect competition, firstly, the supply of labor is absolutely elastic (the straight line S L is parallel to the x-axis) and, secondly, the marginal cost of labor (MRC) is constant and equal to the price of labor, i.e. wage rate (W 0). The reasons for this type of supply schedule are obvious: the firm, a perfect competitor, is so small that changes in its demand for labor do not have any effect on the market. No matter how many workers she hires, she will have to pay them the same - already established in the market - wages and, therefore, incur the same marginal costs with each new hire, i.e. S L = MRC = W 0 .

It is profitable for the company to increase the hiring of workers up to the number L 0, corresponding to the point of intersection of the supply and demand lines (B), when the marginal labor cost (MRC) is equal to the marginal money product (MRP).

Rice. 11.8.

Rice. 11.9.

The shaded area of ​​the figure OABL^ corresponds to the total income of the company, where one part of it (the area of ​​the rectangle OW 0 BL 0) forms its total wage costs (the wage rate W 0 is multiplied by the number of employees L 0), and the other (the area of ​​the triangle W 0 AB) acts as net income (profit) from the use of labor resources.

When moving from an individual firm to an industry representing the entire set of firms, the graph of labor supply and demand will take a different form (Fig. 11.9).

Here you can see the intersection of multidirectional supply and demand curves at the equilibrium point, where the equilibrium wage rate (W Q) and the equilibrium number of employed workers (L 0) are formed. It is this labor price that emerges at the industry level in relation to the firm that acts as a market reality, or a given, which the firm has to accept without complaint.

In conditions of perfect competition, the effect of the classical laws of market self-regulation is directly manifested. At the equilibrium point, there is equally no excess or shortage of labor (demand is exactly equal to supply). This means that there is neither unemployment with its negative social consequences, nor a shortage of workers, which leads to a decrease in labor motivation, a decrease in the demands of company management on personnel, etc. Equilibrium is stable: feedback dampens random deviations from it. Thus, an increase in the price of labor (in the graph to the level Wj) leads to an increase in supply (to the value L g) and a reduction in the demand for labor (to the value L d). There is an excess supply of labor (L s >L d). Some people who want to apply for a job do not find vacancies, competition begins, during which workers agree to lower wages just to be hired. Gradually, the price of labor decreases to the original level.

We especially emphasize that equilibrium is achieved without any external (for example, government) interventions: each firm hires exactly as many workers as it needs to maximize profits, and therefore is not interested in disturbing it. In conditions of imperfect competition, this does not always happen. In the actual practice of managing the labor market (as, by the way, in the market of any other product), strict adherence to all principles of free competition is rarely observed. And yet, labor markets close to perfect exist, including in our country.

Perfect competition in the Russian labor market

In the Russian labor market, which is still undergoing a process of complex formation, there are some segments within which the features of perfect competition predominate. With a certain degree of convention, these today include markets for sellers, builders, drivers, cleaners, repair workers of various profiles, specializing in the repair of housing, offices, household appliances, furniture and shoes, and auxiliary workers. Demand here is represented by many small and minute firms, and supply is represented by an unorganized mass of workers mastering these relatively simple professions. In other words, as expected under perfect competition, both demand and supply are atomistic (numerous and small in size).

Of course, these markets have territorial characteristics. In large Russian cities they are distinguished, for example, by a higher degree of freedom of competition. Here there is both an increased demand for labor services of a certain type and a growing supply. Moreover, the supply is constantly replenished due to the influx of labor from other regions, as well as from neighboring (and sometimes far) foreign countries.

And yet, for the modern labor market, existing in conditions of both a highly developed market economy and a transition economy, imperfect competition is more typical, including such polar opposite forms as monopsony and monopoly, where competition itself almost disappears.

11.4.2. Monopsony in the labor market

Monopsony in the labor market means the presence of a single buyer of labor resources. A single employer is opposed here to numerous independent wage workers.

The main signs of monopsony include:

• 1) concentration of the bulk (or even all) of those employed in a certain type of labor in one company;
• 2) complete (or almost complete) lack of mobility of workers who do not have a real opportunity to change employers when selling their labor;
• 3) establishment by the monopsonist (sole employer) of control over the price of labor in the interests of maximizing profits. Let us first illustrate the monopsony situation with

labor market using conditional data (Table 11.3).

Table 11.3. Marginal labor cost (MRC L) at

monopsony

The main thing that distinguishes the situation under a monopsony from perfect competition is the increase in wage rates when hiring an increasing number of workers. In other words, if for a company that is a perfect competitor, the supply of labor is absolutely elastic and the company can hire any number of workers it needs at the same rate, then with a monopsony the supply schedule has the usual form, increasing with rising prices. And this is understandable: a monopsonist is actually a company-industry. An increase in its demand for labor automatically means an increase in industry-wide demand. To attract additional workers, they have to be lured from other industries. The relationship between supply and demand in the economy is changing, labor prices are rising.

Monopsony in the labor market is also expressed in the fact that for a monopsonist firm, the marginal costs associated with paying for labor resources grow faster than the wage rate (cf. columns 4 and 2 in Table 11.3). Indeed, let the company decide to hire a third worker in addition to two (moving from the second to the third line in the table). What will be its additional costs? Firstly, you will have to pay wages to the third worker (6 units), i.e. in this part, marginal costs will increase in accordance with the increase in the wage rate. But the additional costs don’t stop there. Secondly, the company will have to increase the wage rate for the two already employed from 4 units to the same level of 6 units. As a result, the wage will only rise from 4 to 6 units, but marginal cost will increase from the original level of 6 units to 10 units (really: b + = 10).

Rice. 11.10.

demand for it under monopsony conditions

The consequences of this situation are clearly visible in the graph (Fig. 11.10).

The marginal cost of labor curve (MRC L) is located above the wage rate curve at which labor is offered (S L). In this case, the labor demand curve (D L), which coincides for the firm with the monetary marginal product of labor curve (MRPJ), will intersect with the marginal labor cost curve (MPC L) at point B.

Consequently, according to the rule MRC = MRP, the company will hire L M people in this case. It is not profitable for a monopsonist to hire more people. Therefore, the demand for labor on the part of the monopsonist breaks off at this level and takes the form of a broken curved line (ABL M), highlighted on the graph by thickening. And since, in accordance with the supply curve S L, such a number of workers can be hired with payment for their labor at the rate W M, then this is exactly what the monopsonist will pay them.

Let us pay attention to the fact that point M does not coincide with the point of intersection of the demand and supply schedules O. That is, equilibrium is established at a different point than under perfect competition. Compared to a firm operating in a free competitive market, a monopsonist acquires less labor (L M

Monopsony as a Russian problem

For the emerging Russian labor market, the problem of monopsony is not only theoretical, but also of great practical importance.

Monopsony (albeit in a very specific form) has its roots in our former centrally planned economy, in which the main (and almost only) employer was the state. Socialist monopsony had great features. Unlike a purely market monopsonist, the state did not reduce employment. On the contrary, the complete elimination of unemployment was considered one of the main advantages of socialism over capitalism. However, taking advantage of its monopsony position, it firmly kept wages low. Apparently, it was no coincidence that a malicious saying arose in those days: “The state pretends that it pays us, and we pretend that we work.”

During the reforms, the state ceased to be the only employer. However, even today in the Russian labor market one can encounter a monopsony situation, which arises as a result of the interweaving of residual elements of the state monopsony with existing market economic mechanisms.

Monopsony is clearly evident in the northern territories of Russia, in the former “closed cities” that worked for defense, as well as in many places where city-forming enterprises were once built in a planned manner. It is also inseparable from a number of natural monopolies, such as, for example, the gigantic economic complex of the Ministry of Railways - a kind of “state within a state”, which has entire cities and towns on its books.

In such cases, workers are forced to offer their labor to a single employer, on whom their monetary income, and sometimes their very existence, depends entirely. After all, the opportunity to find a new employer is associated either with the employee moving to another region or with a change of profession. It is often beyond the power of an individual or even a large group of people to solve these problems. Where, for example, can Vorkuta miners find other work? It simply isn’t there outside the mine gates. The city is surrounded only by an icy desert. And to move, you need a lot of money, which no one has. In addition, I would have to give up my home for next to nothing. It is impossible to find a buyer for it: everyone around them is not averse to leaving.

The situation was further complicated by the fact that during privatization many monopsonists became private firms. Now nothing holds them back, and the desire to maximize profits, on the contrary, pushes them to reduce employment and wage levels. In fact, for example, Norilsk Nickel did not cease to be a monopsonist just because it passed from state to private hands.

The state itself is obliged to actively help limit monopsony in Russia, if only for the reason that in the recent past it was the caring parent of monopsony structures. And most importantly, because natural forces are unable to cope with this problem. After all, they operate only in conditions of competition, which does not exist under monopsony. In this case, government intervention is not an anti-market measure at all. "Establishment[state] A minimum wage for a monopsonist is the same as a maximum price for a monopolist: both of these policies force the firm to behave as if it were facing a competitive market."- writes the prominent American microeconomist H.R. Varian.

And yet, it is not only the state that needs to intervene in the formation of a competitive labor market. Such a social institution as trade unions is called upon to play a special role here.

11.4.3. Trade unions in the labor market

Trade unions are associations of employees created to protect their economic interests and improve working conditions. According to the composition of the united workers, they can have a narrow professional, sectoral, regional, national and even international character.

It is well known that in any market (except for a perfectly competitive market) associations of both demand and supply agents can arise. Created in order to obtain economic advantages and benefits for their members, these associations give rise to certain restrictions on freedom of competition with all the ensuing consequences in the field of pricing.

In the labor market, hired workers do not always occupy an equal position in relation to employers that corresponds to fair economic relations. After all, on the employer’s side there are advantages such as wealth, organizational capabilities of the enterprise, and often political influence. In this regard, hired workers have a natural need to oppose the buyers of labor with the combined power of its sellers.

Trade unions should play the role of such a force. Their main task is to protect employees from possible exploitation by enterprises that demand labor and pay it at a low price. Therefore, trade unions organize collective forms of labor sales instead of individual ones. They are trying to ensure an increase in wages, an increase in the number of employees, improved working conditions for workers and social guarantees for the unemployed. Along with carrying out purely economic tasks, trade unions often interfere in the political life of their countries. Significant politicization is characteristic, in particular, of European trade unions.

Trade unions in the USSR and Russia

In pre-revolutionary Russia, the trade union movement, suppressed by the monarchical state, was unable to reach the required degree of maturity. Its real impact on labor relations was virtually non-existent. Later, under Soviet rule, trade unions functioned as part of the party-state mechanism. They did not interfere at all in many issues that traditionally formed the core of trade union activity. Thus, they did not even try to achieve higher wages and did not go on strike.

Being dependent on the country's leadership, Soviet trade unions nevertheless played an important role in solving numerous social problems. Without the consent of the trade union committee it was impossible to fire a single employee. Through the trade union system, various preferential (not sold at full price) vouchers to sanatoriums, rest homes, etc., travel tickets were distributed, and financial assistance was provided to those in need.

Currently, Russian trade unions are taking only the first steps towards establishing fundamentally new relationships with both the state and enterprises. They have yet to take an independent place both in the emerging market system as a whole and in the labor market. The largest association of trade unions - the Federation of Independent Trade Unions of Russia (FNPR) - is the direct “successor” of Soviet trade unions and unites the majority of workers in state and privatized enterprises. There are still large elements of formalism and bureaucracy in the activities of the FNPR, and the ability to actually defend the interests of workers (for example, to achieve payment of wage arrears at a particular company) is limited. As for new private firms, there are usually no trade union organizations at all. Nevertheless, modern Russian trade unions (especially at the local level) have ceased to be obedient appendages of the state. Their organization of strikes and mass protests are the first signs of the independent role of the trade union movement in the economy.

There are three main models for the functioning of the labor market with the participation of trade unions.

stimulating labor demand

The first model is focused on increasing wages and employment by increasing the demand for labor. A trade union can achieve such an increase by improving the quality of labor goods (for example, by promoting an increase in labor productivity at the enterprise or increasing demand for finished products).

Let's present this model graphically (Fig. 11.11).

Rice. 11.11.

When the union achieves an increase in the demand for labor, the demand curve shifts to the right from position Dj to position D 2. In this case, two most important tasks of trade unions are simultaneously solved: employment increases (from Lj to L 2) and the wage rate increases (from Wj to W 2). It is obvious that the considered model is extremely attractive, but in practice it is difficult to implement. In fact, trade unions in this case act in the interests of both their members and entrepreneurs, since they improve the quality of the labor resource. This is possible only in conditions of social peace and partnership in society. Japanese workers provide an example in this regard. In accordance with the established relations between labor and capital in the country, they do a lot for the prosperity of their companies free of charge and voluntarily. For example, they organize quality circles in which, after work, problems of improving products are discussed.

Labor Supply Reduction Model

The second model is focused on increasing wages by reducing labor supply. This reduction can be achieved within the framework of narrowly professional (shop) trade unions, which are usually called closed or closed. Such trade unions establish strict control over the supply of highly qualified labor by limiting the number of their members, for which they use long training periods for the relevant profession, restrictions on the issuance of qualification licenses, high entry fees, etc.

At the same time, trade unions seek to pursue policies aimed at reducing the overall supply of labor, in particular by seeking, in particular, the adoption by the state of relevant laws (for example, establishing mandatory retirement at a certain age, limiting immigration or reducing the length of the working week).

A graphical representation of this model is shown in Fig. 11.12.

Rice. 11.12.

direct impact on wages

If a trade union achieves a decrease in labor supply in one way or another, then its curve shifts from position to position S 2. The consequence of this will be an increase in the wage rate from Wj to W 2. But at the same time, employment will decrease from h l to L 2.

Finally, the third - the most widespread in our time - model is focused on increasing wages, achieved under direct pressure from the trade union. Here, as a rule, we are talking about powerful, open (i.e., accessible to everyone who wants to join them) sectoral or national trade unions, which, for example, under the threat of a mass strike, are able to force enterprises to agree to the increase in wage rates desired by the trade union boards (Fig. 11.13).

The graph shows that the equilibrium wage rate in a competitive labor market could be W Q . However, the industry trade union seeks to set wages at a level not lower than W TU, threatening a strike otherwise. The labor supply curve S L turns into a broken curve W TL1 CS L (it is thickened on the graph). In accordance with its demand curve, the enterprise will respond to an increase in the wage rate from W Q to a reduction in the number of employed workers from L q to L^,.

Rice. 11.13.

In the third (as well as in the second) model, wages increase due to a decrease in employment. From this we can conclude that the results of the struggle of trade unions for increasing wages are contradictory, since this increase itself is associated with a decrease in the number of workers. In other words, unbridled wage growth can generate unemployment.

11.4.4. Mutual monopoly on the labor market

Recognizing the potential danger of narrowly selfish actions of trade unions for the economy, it should, however, be borne in mind that the unilateral dominance of trade unions in the labor market is a very rare phenomenon. In practice, trade unions are usually opposed to powerful giant corporations that are in no way inferior to them in their power (and often superior). In economic theory, such a market situation is called a mutual, or bilateral, monopoly.

How does a mutual monopoly reach market equilibrium?

To depict this situation, we need to combine two graphs known to us: the graph of labor demand under monopsony (Fig. 11.10) and the graph for establishing increased wages under pressure from the industry trade union (Fig. 11.13). The results of this overlay are presented in Fig. 11.14.

Rice. 11.14.

A monopsonist enterprise will demand that wages be set at the level of W M, and the trade union - at the level of W TL1. The outcome of the struggle depends entirely on the balance of forces of the opposing sides. But usually, in the end, the actual rate occupies some intermediate position.

It is important to emphasize that it is no coincidence that the equilibrium price of labor (W 0) is located between the two extreme positions (W M and W TU). The confrontation between the monopsony of an enterprise and the monopoly of a trade union leads to the transformation of the labor market into a quasi-competitive one (similar to a competitive one), and therefore the equilibrium point approaches equilibrium under conditions of perfect competition. Under a unilateral monopsony or monopolistic dictatorship, such a transformation is both theoretically and practically impossible. However, mutual monopoly, which is the concentration of monopolistic principles simultaneously at both poles of the market (both supply and demand), due to the conflicting interests of these powerful parties, partially compensates for the lack of competition. After all, market subjects cease to dominate it; they are no longer able to unilaterally impose their will and prices.

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FEDERAL EDUCATION AGENCY

FGOU VPO "URAL ACADEMY OF STATE

SERVICES"

Chelyabinsk Institute (branch)

Grade________________________ ________

Teacher's signature_________________

"__"__________________________ ___2011

Labor market in conditions of imperfect competition.

Course work

According to economic theory

Konstantinov Anton Nikolaevich

1st year student MO-61

Specialty080507.65

"Organization Management"

Scientific director

Snedkova V.S.

Senior teacher

Chelyabinsk

2011

With

Introduction 3

Chapter 1 Labor market 6

1.1.The concept of the labor market and its features 6

1.2. Components and functions of the labor market 10

Chapter 2 Labor market in conditions of imperfect competition 13

2.1. Monopsony labor market 13

2.2. Models of the labor market with the participation of trade unions, bilateral monopoly 15

2.3. Unemployment in the labor market, employment services and their activities 21

2.4 The role of the state 27

2.5 Unemployment and the role of trade unions 30

Conclusion 37

List of used literature 38

Introduction.

This course work examines the characteristics of the labor market and unemployment.

This is a very hot topic at the moment. Since the labor market is the most important element of a market economy. Due to the decline in production in the 90s, the overall situation on the labor market became tense and stable. This is how the phenomenon of unemployment appeared in our lives.

The purpose of the work is to analyze the modern labor market, as well as the problems of unemployment and ways to solve them.

The subject of the study is indicators characterizing the state of the labor market.

In accordance with the goal, the following tasks were set and solved:

Consider the theoretical aspects of the essence, structure and function of the labor market, its specifics and features at the present stage;

Identify factors influencing the growth of unemployment among certain groups of the population;

Assess the state of the labor market in Russia today.

The labor market is the sphere of formation of demand and supply for labor services for wages and other benefits provided. Through the labor market, labor power is sold for a certain period.

The labor market is not a market of primary demand, but of production demand, that is, demand for factors of production, the value of which depends on the demand for goods and services. The productivity of demand in the labor market determines the dependence of the situation there on the state of affairs in the commodity markets. Labor is purchased on the market only because its use produces goods and services that are in demand among buyers. However, a worker’s salary cannot be higher than the amount that can be earned on the market for the products he produces.

With constant prices for goods and services, the wage rate can rise only if labor productivity increases. In this case, the wage rate is understood as the amount of money paid to an employee for labor services provided by him during a certain period of time (hour, shift or month) or necessary to perform a certain amount of work (for example, the manufacture of one part).

Demand in the labor market is determined by the formula: “the higher the payment that workers (usually highly qualified) require for their work, the fewer of them employers are willing to hire,” from which the supply formula follows: “the higher the payment for a certain type of work, the greater the number workers are ready to fulfill it.”

Supply growth is also influenced by the level of prestige of work and the moral satisfaction it brings. A decrease in supply is caused by the high degree of severity of work, its complexity, as well as the need of people to have free time. If wages increase significantly, labor supply may also decrease due to the income effect.

Like all market prices, wages are formed as a result of the interaction of demand presented by employers and supply generated by employees. Deviations of wages from the equilibrium level occur under the influence of changes in the situation in various product markets, including due to the emergence of new industries that offer better working conditions.

For more complex, highly skilled work, long-term training is required, which, in turn, provides a higher salary. In developed countries, the work of specialists with higher education is usually paid higher than low-skilled workers. The greater amount of knowledge and skills accumulated as a result of training and previous work activities allows them to perform types of work that are more “valuable” to employers. From these positions, the desire to obtain an education is seen not only as a desire to improve the educational level, but also as an incentive to create more favorable conditions for selling one’s labor in the future.

In addition, the level of remuneration is influenced by the degree of risk associated with a particular job. The higher the risks, the higher the wage rate. Enormous risk associated with such professions as miner, test pilot, entrepreneur, etc.

1.Labor market.

1.1.The concept of the labor market and its features.

Among the concepts of a market economy, the central place is occupied by the definition of the essence of the content of the market as such and its varieties.

In its most general form, a market is a system of economic relations between sellers and buyers of goods and services, a form of communication between the parties to an exchange, during which the market price for the object of exchange is established and its owner changes.

The market can also be represented as an economic and (or) geographical space in which the process of commodity communication, the exchange of goods for money and, accordingly, money for goods, takes place.

The market is also understood as a mechanism that brings together sellers and buyers of goods and services.

Each of these definitions (system of relations, space, mechanism) emphasizes the essential aspects of the concept of “market” and thereby reflects its versatility.

Market relations presuppose the existence and functioning of many markets, covering various areas of human activity. There are markets for raw materials, materials, fuel, finished products, design work, scientific research, services, housing, investments, securities, money, etc. Among these markets, the labor market takes its place.

With the emergence of the labor market, a market economy is also formed.

The money market, trade in land, timber, consumer and industrial goods, etc. do not yet transform the economy into a market one. It becomes market when the labor market arises and is formed.

In the simplest sense, the labor market is a place where people buy and sell goods, a place where goods are traded, bought and sold. In this understanding, the labor market is also the place where the purchase and sale of labor takes place. But this explanation is not enough to understand such a phenomenon as the labor market. We have a brisk trade in various goods; consumer and industrial goods are sold and bought on commodity exchanges, but the purchase and sale of labor has not yet been established. The labor market still needs to be reformed. But for this you need to know: under what conditions does the labor market arise and form?

The sale of labor can take place provided that the employee is legally free and can, at his own discretion, dispose of his ability to work - labor power. But this is still not enough, because legal freedom does not yet force him to sell his labor. He is forced to economically sell labor only when, when he does not have everything necessary to run his farm as a source of obtaining all the means necessary for life, or when he does not have any other conditions of existence.

As you know, the appearance of a seller of a product on the labor market does not in any way guarantee its sale - for this a buyer is also needed. Only then will the purchase and sale of goods take place. This fully applies to the seller of goods - labor.

When selling labor on a competitive market, an equivalent exchange occurs, since wages are payment for the use of labor, that is, for labor. There is no exploitation going on here. Added value, or more precisely, the added price of a product or service, is formed by four factors of production: part of it, created by labor, is paid to the worker in the form of remuneration - wages, other parts make up payment for the use of capital, land andentrepreneurship. The amount of wages depends on: the situation in the labor market, determined by the ratio of labor demand and labor supply; on the prevailing model for the formation of wage rates and on other factors reflecting the characteristics of certain national and regional labor markets. Thus, by recognizing that the labor of workers is bought and sold on the labor market, all conditions for the normal functioning of market relations are satisfied. 1

Demand in the labor market, as in any other market for resources or factors of production, is derivative and depends on the demand for the products that will be manufactured using this resource.

Features of the labor market:

Firstly, the long duration of the relationship between the seller and the buyer. If in the market for most consumer goods (with the exception of expensive products sold on credit and goods with warranty service) the contact between the seller and the buyer is fleeting and ends with the transfer of ownership rights to the object of trade, then in the labor market the relationship between the seller and the buyer lasts for that amount of time , for which the employee’s employment contract is concluded. The duration of contact between the seller and the buyer is a necessary condition for the constant resumption of transactions for the purchase and sale of labor services;

secondly, the large role played in the labor market by non-monetary factors - complexity and prestige, working conditions, health safety, job security and professional growth, moral climate in the team, etc.;

Description of work

The purpose of the work is to analyze the modern labor market, as well as the problems of unemployment and ways to solve them.
The subject of the study is indicators characterizing the state of the labor market.
In accordance with the goal, the following tasks were set and solved:
- consider the theoretical aspects of the essence, structure and function of the labor market, its specifics and features at the present stage;
- identify factors influencing the growth of unemployment among certain groups of the population;
- assess the state of the labor market in Russia today.

Content

The concept of the labor market and its features 6
1.2. Components and functions of the labor market 10
Chapter 2 Labor market under conditions of imperfect competition 13
2.1. Monopsony labor market 13
2.2. Models of the labor market with the participation of trade unions, bilateral monopoly 15
2.3. Unemployment in the labor market, employment services and their activities 21
2.4 The role of the state 27
2.5 Unemployment and the role of the trade union