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The labour supply curve shows how changes in real wage rates might affect the number of hours worked by employees.. In economics, a backward-bending supply curve of labour, or backward-bending labour supply curve, is a graphical device showing a situation in which as real (inflation-corrected) wages increase beyond a certain level, people will substitute time previously devoted for paid work ...
Following the recession of 2008 real wages globally have stagnated [6] with a world average real wage growth rate of 2% in 2013. Africa, Eastern Europe, Central Asia, and Latin America have all experienced real wage growth of under 0.9% in 2013, whilst the developed countries of the OECD have experienced real wage growth of 0.2% in the same period.
By showing their workers that they will provide stable real wages, firms secure their loyalty. [1]: 384 Seeing implicit contracts as a poor basis for real wage rigidities, new Keynesian economists sought other explanations. [1]: 384 Efficiency wage theories explain why firms might pay their employees more than the market clearing rate.
However, also as the real wage rate rises, workers earn a higher income for a given number of hours. If leisure is a normal good —the demand for it increases as income increases—this increase in income tends to make workers supply less labour so they can "spend" the higher income on leisure (the " income effect ").
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Wages adjusted for inflation in the US from 1964 to 2004 Unemployment compared to wages. Wage data (e.g. median wages) for different occupations in the US can be found from the US Department of Labor Bureau of Labor Statistics, [5] broken down into subgroups (e.g. marketing managers, financial managers, etc.) [6] by state, [7] metropolitan areas, [8] and gender.
Work by George Akerlof, William Dickens, and George Perry, [16] implies that if inflation is reduced from two to zero percent, unemployment will be permanently increased by 1.5 percent because workers have a higher tolerance for real wage cuts than nominal ones. For example, a worker will more likely accept a wage increase of two percent when ...
For example, if you believe that wages are set for periods of one-year and you have a quarterly model, then the length of the contract will be 4 periods (4 quarters). There would then be 4 unions, each representing 25% of the market. Each period, one of the unions resets its wage for four periods: i.e. 25% or wages change in a given period.