9. An increase in productivity means that workers Marginal Product (MP) is higer at every level of employment. This, in turn, means that MRP rises as well, and since MRP is the demand for labor, labor demand increase as shown above.

   An increase in demand means that more workers will be hired as shown in the graph to the left. If the firm faces a horizontal labor supply curve then wages won't increase but hiring will for certain. Keep in mind that more productive workers are like a fall in production costs and we learned early on that firms increase output when production costs fall, and increased output requires more labor.

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