Labor is fundamentally different from all other production resources, therefore, in a market economy, a special market has emerged - the labor market.

The labor market in the ordinary sense is a place where workers, job seeker, and an employer looking for an employee for the purpose of concluding an employment contract.

From the perspective of economic science labor market is a market for goods whose price is determined by the interaction of demand and supply of labor.

The main difference between the labor market and the market for other resources is that its product - labor - is a form of human life and is therefore inseparable from it. In other words, the product on this market is not presented independently, but by those living people whose ability to work it reflects.

Highlight interior And external labor market. In the internal, or intra-company, labor market, rules are established that govern the hiring (movement) of workers within the enterprise. The external market represents the entire population of workers searching for work and employers offering jobs. Key task foreign market is to minimize the time required to search for the appropriate contingent on the labor market and conclude a contract.

The labor market has its own specific infrastructure. Main elements market infrastructure labor are: labor exchange; employment and retraining service; organization involved in territorial resettlement work force and interstate personnel exchange, etc.

Labor exchanges- these are institutions that carry out intermediary operations between workers and entrepreneurs when making transactions for the purchase and sale of labor, registering the unemployed and studying the supply and demand of potential workers.

The labor market performs many functions:

· ensures coordination of the interests of workers and owners of means of production;

· helps to increase employment efficiency through the rational placement of workers across sectors of the economy;

· combines the training and use of labor;

· regulates the individual income of workers;

· maintains a dynamic balance between labor supply and demand;

· stimulates effective and rational employment;

· promotes the formation of an optimal professional qualification structure of personnel;

· forms personnel reserve to ensure the continuity of social reproduction.

To summarize, we can distinguish two main functions of the labor market: economic and social. Economic function consists in the involvement and distribution of the most important resource - labor in the country's economy. A social function means ensuring workers’ income from labor and reproducing their labor abilities.

In the labor market, as in other markets, there is supply, demand and price. Ownership of labor is considered as a basis for obtaining factor income – wages as prices of labor services (labor).

Labor demand- the amount of labor that producers are willing to hire at a given moment at a given wage level.

Simple model labor demand is based on the following premises.

1. The objective function of the company is to maximize profit. The demand for labor as a factor of production is a derived demand: labor is required for use in production, therefore the decision on the volume of hired (demanded) labor is determined by decisions on the volume of production of the good. The company is interested in making a profit, which is equal to the total cash receipts from the sale of its goods minus production costs. Therefore, the company’s supply of products and the demand for workers’ labor come from the same goal – profit maximization.

2. The behavior of the company is described production function two-factor type (factors of production are labor and capital). In the short run, the firm has a fixed amount of capital and a given level of technology, so the decision on the number of workers hired determines the volume of production, and the law of diminishing marginal return shows the level of productivity of each additional employee hired.

3. The company operates in a competitive goods market and a competitive labor market, where: there are many buyers and sellers of the resource; each individual buyer of a resource does not influence the market price, market demand and supply of the resource; there is free entry and exit from the resource market.

4. The firm's labor costs consist only of employee wages..

Thus, in general view, the demand for labor on the part of an individual firm depends on:

· demand for the manufactured product;

· labor productivity;

· conditions for maximizing profits.

Each additional unit of labor resource acquired must bring the company additional income, called the marginal return on labor (MRP L).

Magnitude marginal return labor can be defined as follows:

where MRP L is the marginal profitability of labor;

MR is the marginal revenue received by the firm from selling an additional unit of output;

MP L - marginal product of labor - the amount of output created by the last hired unit of labor.

In conditions perfect competition, as noted above, marginal revenue is equal to the price of the product prevailing on the market: MR = P. A profit-maximizing firm hires workers until the marginal profitability of labor is equal to wages (MRP L = w), i.e. until the marginal income from the use of labor is equal to the costs associated with its purchase, which are wages.

If in formula (7.4) MRP L is replaced by wage W, and marginal income MR by price P, we obtain:

where W is nominal wage;

P – issue price;

- real wages.

From the resulting formula (7.5) we can conclude that the condition for maximizing profit is equality between the marginal product of labor and real wages.

How should a company behave? If marginal revenue exceeds marginal cost, and total profit can increase with the number of people employed (MR L > MC), then the number should be increased busy workers.

If MR L< MC, то следует уменьшить число занятых, поскольку прибыль уменьшается с каждым дополнительным рабочим.

If MR L = MC, then the number of employees should not be changed since profit is maximized.

All the above discussions about the conditions for maximizing the profit of a firm that hires a certain amount of labor to obtain additional income from its hiring allow us to draw another conclusion: the demand curve for labor D L coincides with the MRP L curve and reflects the change in the value of the marginal (marginal) product of labor ( MRP L) (Fig. 7.2, a).

The demand for labor increases as the wage rate decreases. Changes in the price of a resource, all other things being equal, lead to movement along the curve (Fig. 7.2, a).

TO factors, which determine the change in position (shift) of the labor demand curve (Fig. 7.2, b), include:

· price of manufactured products. The value of the marginal product equals the product of the marginal product

· by price (MRP L = МР L × Р). A change in the price of a product leads to a change in the value of the marginal product and at the same time there is a shift in the demand curve for labor:

With an increase in price (P product ⇑) ⇒MRP L ⇑= МР L × Р⇑⇒ D L 1 ⇒ to D L 2;

When the price decreases (P product ⇓) ⇒MRP L ⇓= МР L × Р⇑⇒ D L 1 ⇒ to D L 3;

· technology changes.The marginal productivity of labor will increase with an increase in the means of production and their improvement. For example, the labor of a digger who uses an excavator, and a digger with a simple shovel; the work of an economist equipped with a personal computer and an economist with simple stone abacus;

· proposal of other factors.The quantity of a factor of production available can affect the marginal product provided by other factors.

Labor supply is the amount of working time that the population is willing and able to spend on income-generating work.

The peculiarity of the market labor supply curve is that it can have a slope not only up, but also down (Fig. 7.3).

The decision about how much labor can be offered on the market is associated with the possibility of alternative use of the time available to the bearer of labor power. By bringing our labor force to the market, we make a kind of “compromise”, choosing between two goods: leisure and income, with which we can buy consumer goods. Leisure is necessary to recuperate, perform household duties, improve skills, and have fun. Therefore, the labor seller ultimately chooses how many hours to work per day.

This choice is associated with two main limitations:

· limited time in a day to twenty-four hours, which can be distributed between work and leisure;

· hourly wage rate, which determines the possible income of the labor seller.

The hourly rate can thus be considered as the opportunity cost of labor. She happens to be cash equivalent those goods and services that the employee sacrifices to obtain the benefits of rest.

Changes in the wage rate influence the choice between work and leisure.

Firstly, it works substitution effect: Higher wage rates, by raising real income, encourage people to work more. Since every hour of free time has also become more expensive, there is an incentive to replace leisure with work.

Secondly, the substitution effect is counteracted by income effect. With higher wages, income is higher and the owner of the labor force can buy more normal goods and fewer low-quality goods. At the same time, one of the normal goods is rest. If you spend more on leisure, then the income effect encourages you to work less. Thus, the income effect from increasing wages will be expressed in a reduction in the amount of labor offered on the market. When an increase in wages leads to the employee reducing his work time Because of the large income effect, the labor supply curve slopes downward. In Figure 7.3 above critical point E, an increase in wages reduces the quantity of labor supplied because the income effect exceeds the substitution effect, since at higher wages workers can afford more leisure time, even if the cost of each additional hour of leisure in the form of lost income increases .

This economic phenomenon explains the unusual situation in the labor market, when the supply and demand curves have two common points (Fig. 7.4). In the case when the supply curve changes its slope as wages rise, and the demand curve has a normal form, there are two equilibrium positions: at points E 1 and E 2. A positive slope of the supply curve is possible when wages are relatively low, then an increase in wages stimulates an increase in the supply of labor. If wages continue to rise, a point may be reached at which workers prefer free time to increased income, and the supply of labor decreases.

In general, in labor markets, labor supply is formed under the influence of a combination of the following conditions:

· total number population;

· the number of active working population;

· amount of time worked per year;

· qualitative parameters of labor (its qualifications, productivity, specialization).

The market supply of labor consists of the offers of individual workers.

For different workers, the level of remuneration at which a person agrees to work will be different. As a result of the horizontal summation of individual labor supply curves, with an increase in the wage rate, the supply of labor will increase.

The labor supply curve of an individual firm in a competitive market is perfectly elastic, since the employer can buy any required amount of labor at fixed price(Fig. 7.5, a). In the short run, in a perfectly competitive labor market, an individual firm has no influence on the market wage level due to the small share of the firm's labor supply in the total labor market. In the market as a whole, the labor supply curve has a positive slope (Fig. 7.5, b).

In reality, within the framework of the national labor market, there are many labor markets that differ by profession, region, etc. They interact with each other and mutually influence each other.

Equilibrium in perfectly competitive labor markets is characterized by the fact that the equilibrium wage rate is equal to the marginal return on the resource W = MRPL and is the same for all firms in a given industry. Regardless of the number of employed workers, the wage rate remains unchanged (Fig. 7.5, a). Since the supply of labor is perfectly elastic, a profit-maximizing firm will hire workers until the marginal revenue from a resource equals its marginal cost:

Monopsony in the labor market– this is a situation when there is only one buyer of a given type of labor, i.e. one employer.

The existence of monopsony is characteristic of the labor market: nurses; professional athletes; public school teachers; newspaper publishing workers; workers of some specialties in construction.

In a monopsony market, one firm buys all the labor, so by expanding production, the monopsonist must offer more profitable terms people who could potentially work for him. To attract additional workers, he must raise the level of wages and hire each subsequent unit of labor at its supply price. Therefore, the sectoral labor supply curve is relatively elastic. It is assumed that:

The firm faces an upward sloping supply curve.

· the employer can hire only from the given volume of supply, there are no alternatives to hiring;

· the employee has alternative devices.

The amount of labor required to maximize a firm's profit is where the resource's marginal revenue curve, MRPL, intersects the resource's marginal cost curve, MCL. The marginal cost curve for the employer's resource (MCL) is located above the labor supply curve (SL) and is characterized by lower elasticity (Fig. 7.8, a). The equilibrium wage rate is not determined by the intersection of the marginal cost curve and the marginal yield of a resource. The equilibrium wage rate (Wm) is located on the supply curve directly below the intersection of these curves at point C in Fig. 7.8, b.

In a monopsony, the wage rate and marginal cost of labor depend on the amount of labor used. Equating MRC L with labor demand MRP L at point B, the monopsonist will hire L m workers (compared to L C under perfect competition) and pay the wage rate W m (as opposed to the competitive rate W C) (Fig. 7.8 , b).

The profit maximization condition assumes equality between MRP and MC. Under monopsony conditions, costs are equal to wages C L = W L and MC L = ∆C/∆L. After certain transformations of the equality MC L = ∆C/∆L we obtain: MC L = W (1 + 1/E S), where (1 + 1/E S) is the magnitude of the deviation of MC L from the labor supply curve.

All other things being equal, in a monopsonistic market, the monopsonist maximizes his profits by hiring fewer workers and paying a wage rate lower than in a competitive labor market. This is achieved by reducing the number of employees. As a result of increased competition between employees, their wages fall below the equilibrium level.

An important role in the labor market when imperfect competition trade unions play. Trade union is an association of workers that has the right to negotiate with the entrepreneur on behalf and on behalf of its members.

The purpose of the union– maximizing the wages of its members, improving their working conditions and obtaining additional payments and benefits. The activities of trade unions are determined, on the one hand, by their desire to increase the demand for labor, and on the other, to limit the supply of labor.

The result of an increase in demand for a product is both an increase in wages and an increase in employment (Fig. 7.9, a): D L ⇨⇧W C c to W U and ⇧L C to L U . Trade unions can also achieve wage growth by limiting the supply of labor, for example, by: fighting for a shorter working week; ban on overtime work; lowering the retirement age; restrictions on child and female labor, etc.

The tactics of trade unions to limit the supply of labor leads to an increase in wages and a reduction in the number of employees (Fig. 7.9, b): S Lc ⇧ from to S Lu ⇨ W U ⇧ to W C and L U ⇩ to L C .

One of the areas of activity of trade unions is the fight for the expansion of state rationing and labor regulation. The goal of such a struggle is to legislatively increase wages and establish a minimum level above the equilibrium level. As a result, average wages rise and employment levels decline.

In addition to monopsony, an imperfect labor market can be represented by the structure of a bilateral monopoly.

Bilateral monopoly- this is such market structure, in which a single seller and a single buyer purchase and sell factors of production and both can control prices.

The procedure for calculating wages for employees of all categories is regulated various shapes and wage systems.

In reality, however, there is no single labor market, nor is there a single wage for everyone.

The reasons for the differences in wages are as follows:

1. Worker diversity. Workers differ in knowledge, experience, professionalism, have different volumes and quality of human capital, which, of course, is expressed in different labor productivity.

Markets are usually distinguished with:

· wages of unskilled workers;

· wages of qualified workers;

· wages of workers in prestigious professions (Fig. 7.11).

2. Job diversity. They differ in working conditions, location, proximity to home, the possibility of receiving benefits, benefits, various non-monetary rewards, as well as status.

3. Market imperfections, expressed in limited mobility, imperfect information and the possibility of obtaining it at certain costs.

4. Discrimination in the labor market, expressed in the payment of different wages for work of the same productivity. The most dangerous is discrimination, which destroys incentives for entire groups of people to work hard and invest in human capital. This occurs under “equalization” - a situation in which the abilities of individuals are assessed based on ideas about the typical behavior of people belonging to the same social group.

The largest group of people suffering from discrimination are women. In the best case, a woman on average receives 80% of the wages that, with all other things being equal (education, social status, working hours, intensity of work), a man can receive. The difference in income between men and women is explained, first of all, by the prevailing public opinion, the tendency of women to interrupt their career to raise children or do housework.

Discrimination is often carried out by preventing certain groups of the population from obtaining employment in “elite” jobs.

Forms and systems of wages- these are ways of establishing the relationship between the quantity and quality of labor, that is, between the measure of labor and its payment. The form of wages determines how labor is valued when it is paid:

· By specific products;

· by time spent;

· based on individual or collective performance results.

The structure of wages depends on which of these forms is used at the enterprise: whether the conditionally constant part (tariff, salary) or the variable part (piecework, bonus) predominates in it.

Time-based This form of wages is called when the employee’s basic earnings are calculated at the established tariff rate or salary for the time actually worked, i.e. Basic earnings depend on the employee’s qualification level and hours worked. Application time payment labor is justified when the worker cannot influence the increase in output due to strict regulation production processes, and its functions are reduced to observation, there are no quantitative indicators of output, strict time recording is organized and maintained, the labor of workers is correctly charged, and service and number standards are used.

The time-based form of wages can be simple and time-bonus.

At simple time system wages, its size depends on the tariff rate or salary and time worked.

At time-bonus system In addition to wages (tariff, salary), the employee receives an additional bonus for the time actually worked. It is associated with the greater effectiveness of a particular division or enterprise as a whole, as well as with the contribution of this employee in the overall results of work.

By payroll method this system is divided into three types: hourly, daily and monthly.

At hourly pay Earnings are calculated based on the hourly wage rate and the hours actually worked by the employee.

At daily wages wages are calculated based on fixed monthly salaries, the number of working days actually worked by the employee in a given month, as well as the number of working days provided for by the work schedule for a given month.

Piece form of wages assumes that the employee’s basic earnings depend on the price set per unit of work performed or manufactured product (pieces, kilograms, cubic meters, team kits, etc.).

The piecework form according to the payroll method has the following types: direct piecework, indirect, piecework-accord, piecework-progressive. According to the object of accrual, it can be individual and collective.

At direct individual piecework system The size of a worker’s earnings is determined by the amount of products he produces over a certain period of time or the number of operations performed. The entire output of a worker under this system is paid at one constant piece rate. Therefore, the worker's earnings increase in direct proportion to his output. To determine the rate for this system, the daily tariff rate corresponding to the type of work is divided by the number of units of product produced per shift, or the production rate. The rate can also be determined by multiplying the hourly tariff rate corresponding to the type of work by the time standard expressed in hours.

At indirectly to the piecework system The worker’s earnings are made dependent not on personal output, but on the results of the labor of the workers he serves. This system can pay for the work of such categories of auxiliary workers as: crane operators, equipment adjusters, slingers serving the main production. At the same time, to obtain an indirect rate, the daily tariff rate of a worker paid according to the indirect piece-rate system is divided into the standard of service established for him and the standard of daily output of the workers served.

At chord system the amount of payment is established not for a single operation, but for the entire predetermined set of works with a determination of the deadline for its completion. The amount of remuneration for completing this set of works is announced in advance, as is the deadline for its completion.

Piece-progressive the system, in contrast to direct piecework, is characterized by the fact that workers are paid at constant rates only within the established initial norm (base), and all production in excess of this base is paid at rates that progressively increase depending on the excess of production norms.

Collective piecework wage system means that the earnings of each employee are dependent on the final results of the work of the entire team or section.

The collective piecework system makes it possible to use working time productively, widely introduce the combination of professions, improves the use of equipment, promotes the development of a sense of collectivism and mutual assistance among workers, and helps strengthen labor discipline. In addition, collective responsibility for improving product quality is created.

The company sets the payment measure in the form tariff system, considered as a set of standards for regulating wages depending on the main parameters of labor quality. On its basis, wages are differentiated depending on the complexity, nature and conditions of work.

Tariff schedule as an element of the tariff system has the following characteristics: tariff scale range; number of digits; absolute and relative increase in tariff coefficients. The grid range forms the ratio of extreme tariff coefficients. The absolute increase in tariff coefficients represents the difference between tariff coefficients of adjacent categories. The relative increase in tariff coefficients is the ratio of the larger coefficient to the smaller one minus 1, expressed as a percentage.

Tariff rate- This set size remuneration for labor of the corresponding category for certain time labor. The tariff rate corresponding to a particular category is obtained by multiplying the tariff rate of the 1st category by the tariff coefficient of the corresponding category. Tariff rates can be set either in the form of fixed single-digit values, or in the form of “branches” that define limit values.

For tariffication of work and assignment of tariff and qualification categories, tariff and qualification reference books, which contain the requirements for a particular category of worker in the relevant profession, for his practical and theoretical knowledge, for educational level, and for a description of the jobs most often found in professions and qualification categories.

Wage system. The first wage system known to economic science was a system that received its name from its creator, the American engineer F. Taylor. Under this system, labor operations were timed, workers were trained in advanced labor techniques, production standards were established and wages depended on the degree of their implementation.

The second known wage system is named after American entrepreneur G. Ford. Unlike the Taylor system, here the rhythm of labor operations was determined by the conveyor. The growth of labor productivity increased not only the income of entrepreneurs, but also the wages of workers.

Modern systems wages differ from the two mentioned above in that they include an orientation not only to a person’s physical capabilities and his economic interests, but also to social, psychological, moral and ethical, family and everyday aspects. For example, a profit-sharing system assumes that part of a firm's income is used to encourage workers, attracting them to participate in share capital and the board.

System human relations pays special attention to the microclimate in work collective, establishing good business and human contacts with the management of the enterprise, developing competitiveness, etc.

Has become widespread in Japan lifetime employment system, in which not only the employee, but also his family are provided with a guarantee of lifelong employment and receive a number of social benefits.

A perfectly competitive labor market is characterized by the following properties:

• in each industry there are a significant number of firms competing with each other for the right to hire a particular specialist;
• there are a large number of specialists in a certain profession with equal qualifications, and each of them, independently of the others, offers their services on the labor market;
• Neither an individual company nor an individual worker is able to influence the level of wages established in the industry.

Based on the general patterns of demand for a resource, in conditions of perfect competition a firm will place demand for a resource until the value marginal product in in monetary terms the unit of labor it hires is not equal to at the cost of labor, those. until equality is satisfied

P l =MRP l.

For each firm, the downward portion of the curve MRP is the demand curve.

The labor demand curve for the entire industry is the result of the horizontal summation of the demand curves of individual firms. This means that the values ​​of the magnitude of individual demand are summed up at the same price values.

By definition, the supply curve reflects the relationship between the price and the quantity of a good that will be supplied to the market. In a perfectly competitive labor market, each point on an industry's labor supply curve indicates how much compensation must be paid to a particular worker in order for him to offer his services to the industry. Under conditions of perfect competition, all points on the supply curve correspond to the cost to society as a whole of hiring an additional worker in this industry, or, in other words, industry's marginal cost of labor as a factor of production (M.R.C.).

Therefore, in conditions of perfect competition in the labor market in this industry, equilibrium wage level (W) And equilibrium volume of employees labor resources, determined by the intersection point of the industry labor demand curve (curve MRP) and the labor supply curve (curve M.R.C.):

MRP = MRC.

This equality is a condition for maximizing profits from the use of labor as a factor of production. This situation is clearly presented in Fig. 15.2.

Rice. 15.2.

Each firm in a given industry will hire workers based on the industry wage level.

Differences in wages also play a significant role in market conditions. indicators of labor supply elasticity for different categories of workers: the supply of skilled labor is less elastic compared to the supply of unskilled labor. The more skilled labor is, the less elastic its supply becomes and the supply curve will be steeper, and therefore the equilibrium wage level will be higher.

Demand has a similar effect on the wage level: when demand increases and the curve shifts upward to the right, the wage level rises. When demand decreases, objective conditions appear for a reduction in wages.

In addition to market factors, there are also non-market factors that influence the level of wages. These include regional differences and government regulation minimum wage, working hours, overtime work, age restrictions, etc.

Labor market in conditions of imperfect competition

As mentioned above, the labor market can be monopolized on both the demand and supply sides. Let us first consider an imperfectly competitive labor market that is monopolized on the demand side.

Monopsony, or a labor market in which there is a single employer of labor arises under the following conditions:

• a) in the labor market, on the one hand, a significant number of skilled workers who are not united in a trade union interact, and on the other hand, either one large monopsonist company or several companies united in one group and acting as a single employer of labor;
• b) this company (group of companies) hires the bulk of the total number of specialists in one profession;
• c) this type of labor does not have high mobility (for example, due to certain social conditions, geographical isolation, objective restrictions on obtaining new specialty and so on.);
• d) the monopsonist firm sets its own wage rate, and workers are forced to either agree to this rate or look for another job.

A labor market with elements of monopsony is not uncommon. Similar situations often arise in small populated areas, where there is only one large company - the employer of labor. For example it could be small town with one city-forming enterprise, and it is usually called as single-industry town

What is the peculiarity of monopsony and what will it give to entrepreneurs? In a completely competitive labor market, entrepreneurs have a wide choice of specialists, labor mobility is absolute, any firm hires workers at a constant price, and the labor supply curve in the industry reflects the marginal costs of additional attraction of a resource (labor).

Under monopsony conditions, the monopsonist firm represents the entire industry, so the labor demand curves for the firm and the industry coincide. In this case, for an individual monopsonist firm, the labor supply curve shows not the marginal, but the average costs of hiring labor, i.e. for the monopsonist the labor supply curve is the average cost curve of a resource (ARC), and not the limit ones.

Since the labor supply curve for the industry is upward sloping, since attracting additional employee from another industry requires an increase in wages for this worker, then for the monopsonist firm the values ​​of the average resource costs increase.

This means that for her the marginal cost of hiring labor exceeds the average cost (wages).

Example. If a monopsonist firm hires N 1 = 4000 workers at rate W 1, = 400 rubles, then hire ( N 1 + 1)th worker at rate W 2 = 410 rub. will mean that she must pay the same rate to already hired workers, otherwise she will face labor conflicts. Therefore, the marginal cost for a monopsonist firm to hire ( N 1 + 1)th worker will not be 410 rubles, but 40,410 rubles. (10 rubles 4000 – supplement for those already hired N 1 = = 4000 workers, plus 410 rubles paid ( N 1 + 1)th worker).

Taking into account the above, we can conclude that the marginal cost curve for a monopsonist firm is above the labor supply curve.

But any firm maximizes profit when it equalizes the marginal revenue received from hiring an additional unit of a resource with the marginal (rather than average) cost of the resource. Under monopsony conditions, this means that the equilibrium wages W M and number of workers hired N M of the monopsonist firm differ from the values ​​of W) and N x established under a perfectly competitive labor market (Fig. 15.3).

Rice. 15.3.

In a perfectly competitive labor market, the equilibrium values W x and N 1 correspond to point E x intersection of labor demand curves D and labor supply S for the industry.

If a monopsony arises in the labor market, then the supply curve for the industry turns into the supply curve of the monopsonist firm and reflects the firm’s average labor costs, i.e. the level of wages it must pay to each employee. The monopsonist firm equalizes the values MRP And M.R.C. at the point E M, hiring N M workers and paying them a wage rate W M.

Note that under monopsony conditions the curve D is not a labor demand curve, since for a monopsonist firm it is impossible to construct a demand curve(similar to the fact that it is impossible to construct a supply curve for a monopoly).

As follows from Fig. 15.3, the monopsonist will always hire fewer workers ( N M < N 1) and pay them lower wages ( W M< W 1) than in a completely competitive labor market.

Let us evaluate the consequences of monopsonization of the labor market from the point of view of the monopsonist firm, workers and society as a whole. Hiring N M workers, the firm, if it operated under conditions of perfect competition, would have to pay workers a wage rate equal to ; total payments to workers (total costs of the company for hiring labor) would then be determined by the area of ​​the rectangle. Setting the bet W M, the company potentially “wins back” a rectangle from the workers, which goes to pay for other factors of production (profit, interest, rent).

Thus, the monopsonist firm increases its profits. For workers, the emergence of a monopsony will result in a loss N 1–N M jobs and wage reductions from W 1 to W M. Since N 1 –N M workers will not be employed in the industry, then from the point of view of society as a whole, the losses will be the area of ​​the triangle ME m E 1.

Union models. Another option for monopolizing the labor market is a monopoly on the supply side, when a strong trade union is created in the industry, which becomes a monopoly “seller” of labor to entrepreneurs.

Let's first consider a simpler model, where a union in an industry is opposed by many firms that do not act together.

Trade unions resolve many issues related to the protection of the rights of their members, but still the main task of the trade union is to increase wage rates. To imagine how a union achieves higher wages, let's look at a situation typical of a perfectly competitive labor market (Figure 15.4).

With perfect competition in the labor market, the equilibrium wage rate is established W 1, according to which the industry hires N 1 workers.

If the trade union unites only qualified specialists and advocates as a single group, “selling” the labor of its members, then we can consider such a situation as a classic monopoly. Then the industry demand curve becomes a curve for the union average revenue (ARP), and its marginal revenue curve ( MRP) passes below the curve D.

Dot T intersections of curves M.R.C. And MRP will determine the number N 2 union members hired by industry at wage rate W 2. In conditions of constant demand for labor in the industry, a decrease in the number of employees is equivalent to a decrease in the supply of labor.

Rice. 15.4.

It should be noted that in developed countries, the method of increasing wages by narrowing supply is quite often used by trade unions. This is achieved in many ways, for example, by adopting legislation introducing special licenses to engage in a certain type of professional activity (medics, lawyers), creating other barriers to entry into the industry (the need for retraining, licensing fees, passing qualifying exams, etc.). IN last years this process can be observed periodically even in the developed economies of Europe, where there are strong closed trade unions.

A slightly different situation will develop on the labor market if a trade union unites all workers in the industry, from highly qualified to semi-skilled. As a rule, in this case, the trade union resorts to the method of establishing a minimum wage W 3 above equilibrium W 1 by threatening to go on strike. If entrepreneurs agree to a wage rate at W 3, then formally for them the labor supply curve turns into a horizontal line W 3V, those. labor supply becomes perfectly elastic to the point V. If the demand for labor expands further, then hiring more workers N V should lead to an increase in wages. Dot E 3 intersections of labor demand and supply curves for an industry will determine the number of employees N 3. At the same time, in Fig. 15.4 values W 2 and W 3 were chosen arbitrarily for clarity of presentation.

The fact that raising wages by reducing labor supply reduces employment and potentially creates unemployment is a concern for trade unions.

More effective way, leading to both wage growth and increased employment, is expansion of labor demand. This can be achieved if:

• a) the demand for goods manufactured in the industry increases, i.e. using of this resource(labor);
• b) labor productivity in the industry increases;
• c) prices for substitute resources rise.

Trade unions can solve the first problem, for example, by using advertising for products in their industry. The solution to the second problem is achievable with appropriate agreements with employers. You can achieve higher prices for substitute inputs by supporting the fight to raise the minimum wage in industries that employ workers who are ready to potentially replace workers in that industry. However, the ability of trade unions to expand the demand for labor is limited, so trade unions more often resort to reducing the supply of labor in order to increase wages.

The negative effect of increasing wages, i.e. the reduction in the number of people employed in the industry can be reduced if the demand for labor will become less elastic. The lower the elasticity of labor demand, the less employment in the industry decreases for the same increase in wages. The elasticity of demand for labor depends on the availability of substitute resources. If a union is powerful enough, it may resist the use of resources that replace labor.

Strictly speaking, the introduction of a minimum wage has a similar impact on the labor market. W min at the state level: by analogy with the “floor” of prices for commodity market. And in this case, part of the country’s working-age population will be left out of total employment, primarily unskilled workers who agree to offer their labor at wage rates below the minimum established by law W min. In an effort to reduce unemployment, the state will act by the same methods:

• firstly, to initiate an increase in the demand for labor (for example, in many countries government programs job creation);
• secondly, strive to reduce the supply of labor: prohibit the use of child labor, reduce the length of the working week, lower the minimum age and length of service for retirement, etc.

Double monopoly on the labor market. A unique situation may also arise in the labor market when a single trade union (monopolist - seller of labor), uniting workers in the industry, is opposed by a monopsonist firm (buyer of labor).

In other words, The monopoly of labor supply represented by trade unions collides with the monopoly of labor demand represented by the monopsonist firm. Since the main task of the trade union will be the desire to increase wages, and the monopsonist firm, having market power, sets wages below the equilibrium, the real level of wages will be determined by the degree of monopoly power of the trade union and monopsony.

A strong, organized union, supported by other unions, is able to achieve wage levels that exceed monopsonistic and even equilibrium levels. On the contrary, a large monopsonist firm in the conditions of a divided labor movement is able to reduce wage rates below the equilibrium. As a rule, in conditions of a double monopoly, trade unions and entrepreneurs seek to conclude collective agreements that represent a mutual compromise.

The labor market under conditions of perfect competition is a simplified labor market model abstracted from many complex realities. It is intended for reproduction and knowledge of the most significant aspects of the labor market. The simple model is built on a number of restrictions and assumptions that take into account the specifics of perfect competition.

1. There are many workers and a sufficient number of entrepreneurs in the labor market, so none of them has a significant impact on the market price of labor. They are all price takers.

2. Workers and entrepreneurs are free in their decisions to enter or leave a given labor market. Workers can move from one employer to another without any restrictions.

3. Neither entrepreneurs nor employees create any organizations in the labor market demanding a reduction or increase in wages. There is no government regulation in such a market.

4. Workers and entrepreneurs are well informed about the state of the labor market. The former know about available vacancies, the level of wages and other conditions of employment, the latter know about the scale of labor supply and the level of wages that suits sellers of labor services.

5. Economic motivation predominates in the behavior of workers and entrepreneurs. Other things being equal, workers prefer higher wages, and entrepreneurs strive to maximize profits.

6. Fluctuating trends in wages in the labor market objectively lead to a state of equilibrium between the demand for labor and its supply.

Taking into account these simplifications and limitations, a simple model of the labor market does not reflect the conditions of real markets, which represent very complex systems, but it allows one to study the action of market factors within the framework of perfect competition, in particular, to understand the main components of the labor market - the demand for labor and its supply, as well as how their interaction is reflected in the market price of labor services.

The study of labor supply and demand logically follows from a number of concepts discussed in previous topics. Such concepts include the theory of opportunity costs and marginal productivity, marginal product (MP), marginal revenue (M.R.), marginal cost (MS), and also the rule for making an optimal decision (in particular, M.R.- MS). In this chapter, these concepts and quantities will be linked to the labor factor.

3. Demand for labor

Regardless of how many able-bodied people are looking for work, it is mainly the entrepreneur who decides how many actually

their activity will be busy. Labor demand - this is the quantity of labor that the employer is willing and able to buy at the market price of labor in a given period and other things being equal.

The demand for any factor, including labor, is different from the demand for consumer goods in two important respects: 1) the demand for the production factor labor is a derived demand; 2) demand for other factors of production - interconnected demand.

The demand for labor is a derived demand because it is generated by the demand for consumer goods needed by society now and in the future. The interdependence of demand for factors of production is explained by the fact that the productivity of one factor, say labor, depends on the amount of other factors of production used with labor. The nested factors interact with each other, which gives rise to the complex problem of figuring out the sources of income and their distribution.

In the dynamic economies of developed countries, the demand for labor and its structure are constantly changing.

Table 10.1Dynamics of labor demand in the USA

Types of professions		Forecasts|
		employment
		by type of work\
		1990-2005, %\
1. Growing demand
	Home health consultants
	Family lawyers
	Analysis specialists computer systems
	Nursing staff
	Travel agents
	Prison guards, educators
	Computer program writers
2. Falling demand
	Electronics assemblers
	Textile machine operators
	Calculating machine proofreaders
	Operators sewing machines
Source: Schiller B.The Economy Today. Mcgraw-NS. N.		J. 1994. R. 677.

Any firm will increase labor inputs as long as an additional unit of hired labor generates more income than its cost. Marginal product of labor (MP) - is the increase in total product resulting from the use of an additional unit of labor. Marginal income of the product of labor (MRP) is in addition to the firm's total income resulting from the sale of the marginal product of labor.

Under conditions of perfect competition, a firm can sell an additional product without affecting its market price. That's why

marginal revenue

from hiring additional = MRP= MR R,

body worker

Where R - market price of this product.

The decision to hire an additional worker is determined by the difference between the marginal revenue of its product and the marginal cost of hiring an additional unit of labor (L/Q. At the same time, hiring an additional unit of labor does not affect the worker’s wages, since the firm operates in conditions of perfect competition. Consequently, The marginal cost of hiring an additional worker is essentially a wage (W) in a given labor market, otherwise MS= W.

From here the basic rules for hiring additional labor are formed:

/) If MRP > W, then the company will hire additional workers;

2) If MRP < W, then the company will not hire, but rather lay off workers;

3) If MRP = W, then the firm maximizes its income.

According to the conditions of the table. 10.2, a perfectly competitive firm sells its product at a price of $5, and hires labor at a price of $20 per day. The table shows the total product produced daily, the marginal product of labor, the marginal revenue of the product of labor, and wages. Based on these conditions, the firm hires six workers, since the sixth worker brings in an income of $25 at a labor cost of $20 per day. The company cannot hire a seventh worker, since he will bring in only $15 in income. If the wage level falls below $15 (say to $14), then the firm can increase the number of workers to 7, or if the wage level exceeds $25, but is less than 50S, then the firm will reduce the number of workers

up to 5. The situation when MRP = W, can be implemented somewhere between 6 and 7 workers.

Table 10.2

Marginal revenue of the product of labor and the demand for labor of a perfectly competitive firm

Number of employees	Total Product (TP)	Marginal product (MP)	Marginal income of the product of labor (MRP), dollars	Salary (MS), dollars
				20 -P-
				20 -P-
				20 -P-

More clearly, the process of hiring labor can be represented in the form of a labor demand curve as a function of real wages (W/ P). This approach is justified because the company

making a decision on hiring labor, compares wage costs (W) with prices of manufactured products (R).

Labor demand curve (L) determined by the marginal income of the product of labor. Its slope (from top to bottom to right) reflects the falling productivity of workers, whose total capital-to-labor ratio decreases due to the attraction of additional labor. The firm will hire workers up to the point at which the marginal revenue of the product of labor equals the real wage. If real wages decrease from (W/ P^) before (W/ P\),

then the number of hired workers will increase from lq to L\. Real wages will fall if nominal wages fall or the price level rises.

Thus, the demand curve for labor of a perfectly competitive firm is represented by the falling part of the marginal revenue curve for the product of labor.

Market (industry) demand for labor under conditions of perfect competition, it is established by horizontally summing the labor demand of firms in a given industry.

If nominal wages fall and prices rise, the demand for labor increases. An increase in the hiring of labor will be expressed by a movement along the demand curve. However, changes in other factors can shift the curve to the right (increased demand) or left (decreased demand for labor). Among such factors, the most common are: a) prices for the company’s products; b) prices of resources involved in production; c) technology; d) labor productivity of workers.

An increase in prices for manufactured products leads to an increase in the demand for labor, while a fall in prices reduces this demand. Changes in the prices of inputs involved in production can also increase or decrease the demand for labor. A fall in prices for capital used leads to an increase in the capital-to-labor ratio, which reduces the demand for labor. Rising prices for capital reduce its use, increasing the demand for labor. Technological changes can directly lead to increased hiring of labor. If the introduction of a new technology dramatically increases labor productivity, then the desire to increase production will lead to an increase in the demand for labor.

However, technological progress does not always lead to an increase in the use of labor. The processes of introducing automation and conveyors often force a reduction in the share of living labor in production. And finally, an increase in the quality of labor and an increase in its efficiency create a demand for this labor. A fall in labor productivity leads to a reduction in demand for it.

We have established that the demand for labor is a derived demand and employment is inversely proportional to the level of wages. At the same time, it is important not only to see that the movement of these quantities is opposite, but also to know the intensity of the influence of one of them on the other. To measure the response of one variable to another, elasticity is used. Change in labor demand (L£) depending on

changes in wages (DNO determines elasticity of labor demand. This value depends on the following factors: a) elasticity of demand for the company’s products; b) the share of wages in the total costs of producing a unit of output; c) the degree of difficulty in replacing labor with other resources; d) the duration of the period of adaptation of the company to changes in wages.

A) Let's assume that a 10% increase in wages will increase total costs units of the product by 5% and the price of the product will also rise by 5%. If the elasticity of demand for a given product is low enough, say 0.5, then sales of the product will decline by only 2.5%. However, if the elasticity of demand is high, say 2.0, then sales will fall by 10%, since wages will increase by the same amount. The more sales decline, the more the firm will reduce employment. Thus, the higher the elasticity of demand for a product, the higher the demand for labor producing that product.

b) If labor accounts for only 10% of total costs, then a 10% increase in wages will raise total product costs by only 1%. Such a cost increase will have little impact on product price, sales volume, and employment, but if labor accounts for 80% of costs, then the impact of wage increases on product sales and employment will be much greater. Thus, the demand for labor is more elastic, the higher the share of labor costs in total costs.

c) In some cases, existing technology knows only a single production method, and the possibilities of modifying it to save labor costs are very limited. In other cases, there are alternative methods for mechanizing labor. Given high enough wages, one or more of these methods may be quite effective and therefore feasible. Hence, the higher the possibility of replacing capital with labor, the higher the elasticity of demand for labor.

G) The long period allows the firm to more fully adapt to changes in wages. Therefore, the elasticity of labor demand will be higher when the time horizon allows for changes in wages associated with technological innovation and resource shifts.

The generalized impact of the four factors considered on the elasticity of labor demand is presented in Table. 10.3.

Table 10.3

The impact of various factors on the elasticity of labor demand

Labor demand will be:
more elastic if	less elastic if
1 . Demand for the firm's products is relatively elastic 2. Wages make up a significant share of total costs 3. The substitutability of resources is quite high 4. The firm has a sufficient time horizon to adapt to changes in wages	1. Demand for the firm's products is inelastic 2. Wages make up a small share of the firm's total costs 3. The substitutability of resources is significantly limited 4. The firm has very limited time to adapt to changes in wages

The labor market is a socio-economic form of movement of labor (labor), corresponding to a system of highly developed commodity relations. It has a number of features.

First, demand in the labor market is derived from the demand for goods and services of industrial and personal consumption, which slows down and sometimes transforms the impulses of consumer expectations. Secondly, the specificity of the goods sold on it - labor services - significantly specializes economic processes. Thirdly, in this market it is impossible to fully implement the characteristic market economy principle of consumer priority. After all, even the highest level of development of a market economy does not cancel the supply in the labor market of such weakly socially protected and less competitive workers as youth, women, disabled people, etc.

The main subjects of the labor market are:

• · counterparties of labor relations - employees and employers;
• · intermediaries between employers and employees;
• · representatives of government bodies who develop the principles of legal regulation of relations in the labor market, carry out its state regulation and control over compliance with the law;
• · representatives of the interests of workers and employers - such public organizations, as trade unions, associations, unions of entrepreneurs, consumers and others that protect the interests of subjects of labor relations.

The main components of the labor market include labor price, competition, supply and demand. The price of labor appears in the form of wages; competition - in the form of competition between workers for jobs, employers - for labor, and also between workers and employers - for terms of employment. Demand is formed by the need for labor in the context of industries, regions, enterprises and organizations. It depends on the level of development of the economic structure, the presence of other factors of production and methods of their technological application, the magnitude of demand for goods and services of industrial and personal consumption, and the phase of the economic cycle. Supply is determined by the number and structure of available labor resources presented on the market and capable of being delivered there. It depends on the population size and its growth rate, the share of able-bodied people in its total number, the length of the working day, the intensity and productivity of labor, the qualifications of workers, their migration mobility and standard of living, etc.

The labor market in conditions of perfect competition is a simplified model of the labor market, abstracted from many realities. The simple model is built on a number of restrictions and proposals that take into account the specifics of perfect competition:

• 1. The presence of many workers and a large number of employers does not allow any of them to have a significant influence on the market price of labor.
• 2. Workers and employers have full information about the state of the labor market. Workers know about available vacancies, employers know about the scale of labor supply, etc.
• 3. There are no organizations in the labor market that can raise or lower wages.
• 4. Workers and employers can freely enter or leave a given labor market. Workers can move freely from one employer to another.

In a competitive labor market, the equilibrium wage rate (W E) and the number of workers hired (L E) are determined by the market supply of labor S and demand for labor D.

An individual employer in a given market takes prices as a given; he can hire any number of workers at the going market price without causing a change in the wage rate.

Each individual firm in perfect competition can hire as many workers as it wants at the equilibrium wage rate W E . The labor supply curve facing an individual firm becomes perfectly elastic. It shows what wages a firm will have to pay to hire a certain number of workers, i.e. the supply curve is the average factor cost curve. The marginal factor cost curve represents the firm's cost of hiring an additional worker. In conditions of perfect competition, hiring an additional unit of labor does not affect the employee’s wages, i.e. The marginal cost of hiring an additional worker is essentially a wage. In a given labor market, the average and marginal factor cost curves coincide (AFC L (W)=MFC L).

The decision to hire an additional worker is determined by the difference between the marginal revenue of the worker's product (MRP L) and the marginal cost of hiring an additional unit of labor (MFC L).

If MRP L< W, то фирма будет сокращать рабочих.

If MRP L > W, then the firm will hire workers.

If MRP L = W, then the firm maximizes revenue.

Graphically, the process of hiring labor for an individual company is presented in Fig. 2.1. The enterprise will hire the number of workers L 1 at the rate W e .

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 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: feedbacks suppress 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 real practice management in 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 close to perfect markets labor exist, including in our country.

Perfect competition in the Russian labor market

On Russian market labor, 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, 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 differ, for example, more high degree 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 modern market labor existing in conditions of both highly developed market and transition economies is more characterized by imperfect competition, 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 similar 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 improving 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. That's why trade unions organize collective forms sales of labor in exchange for 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 practically absent. Later, at Soviet power, 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 is the Federation independent trade unions Russia (FNPR) - is the direct “successor” of the Soviet trade unions and unites the majority of those employed 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 an independent role trade union movement in economics.

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're talking about about powerful, open (i.e., accessible to everyone who wants to join them) industrial 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 union (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.