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Dialogue: 0,0:00:00.00,0:00:02.75,Default,,0000,0000,0000,,♪ [music] ♪
Dialogue: 0,0:00:08.16,0:00:10.77,Default,,0000,0000,0000,,- [Prof. Alex Tabarrok] In this set\Nof lectures on labor markets,
Dialogue: 0,0:00:10.77,0:00:12.52,Default,,0000,0000,0000,,we'll be looking at questions,
Dialogue: 0,0:00:12.52,0:00:14.60,Default,,0000,0000,0000,,such as: How are wages determined?
Dialogue: 0,0:00:14.60,0:00:18.30,Default,,0000,0000,0000,,Why do Americans\Nearn so much by global standards?
Dialogue: 0,0:00:18.30,0:00:22.04,Default,,0000,0000,0000,,What's human capital and how\Ndoes it help us to increase wages?
Dialogue: 0,0:00:22.04,0:00:24.10,Default,,0000,0000,0000,,Do labor unions help workers?
Dialogue: 0,0:00:24.10,0:00:26.18,Default,,0000,0000,0000,,And if so, by how much?
Dialogue: 0,0:00:26.18,0:00:29.06,Default,,0000,0000,0000,,And how does discrimination\Naffect labor markets?
Dialogue: 0,0:00:29.60,0:00:31.83,Default,,0000,0000,0000,,We're going to begin\Nin this part of the lecture
Dialogue: 0,0:00:31.83,0:00:34.31,Default,,0000,0000,0000,,with the determination of wages.
Dialogue: 0,0:00:38.34,0:00:40.64,Default,,0000,0000,0000,,In this set of lectures\Non labor markets,
Dialogue: 0,0:00:40.64,0:00:42.44,Default,,0000,0000,0000,,we'll be looking at questions such as
Dialogue: 0,0:00:42.44,0:00:44.38,Default,,0000,0000,0000,,How are wages determined?
Dialogue: 0,0:00:44.38,0:00:47.92,Default,,0000,0000,0000,,Why do most Americans\Nearn so much by global standards?
Dialogue: 0,0:00:47.92,0:00:49.40,Default,,0000,0000,0000,,What's human capital?
Dialogue: 0,0:00:49.40,0:00:51.84,Default,,0000,0000,0000,,How does it help us\Nin increased wages?
Dialogue: 0,0:00:51.84,0:00:55.23,Default,,0000,0000,0000,,Do labor unions help workers,\Nand if so, by how much?
Dialogue: 0,0:00:55.23,0:00:58.02,Default,,0000,0000,0000,,And how does discrimination\Naffect labor markets?
Dialogue: 0,0:00:58.02,0:01:00.04,Default,,0000,0000,0000,,We're going to begin\Nin this part of the lecture
Dialogue: 0,0:01:00.04,0:01:02.62,Default,,0000,0000,0000,,with the determination of wages.
Dialogue: 0,0:01:03.14,0:01:06.58,Default,,0000,0000,0000,,What makes the demand for labor\Ndifferent than the demand for apples
Dialogue: 0,0:01:06.58,0:01:10.50,Default,,0000,0000,0000,,is that the demand\Nfor labor is a derived demand.
Dialogue: 0,0:01:10.50,0:01:15.32,Default,,0000,0000,0000,,Firms hire workers because\Nthe workers increase their revenues.
Dialogue: 0,0:01:15.32,0:01:18.45,Default,,0000,0000,0000,,The key idea\Nbehind the demand for labor
Dialogue: 0,0:01:18.45,0:01:20.71,Default,,0000,0000,0000,,is the marginal product of labor,
Dialogue: 0,0:01:20.71,0:01:22.96,Default,,0000,0000,0000,,the increase in a firm's revenues
Dialogue: 0,0:01:22.96,0:01:25.64,Default,,0000,0000,0000,,created by hiring\Nan additional laborer.
Dialogue: 0,0:01:25.64,0:01:27.27,Default,,0000,0000,0000,,And we're going to see\Nseveral important things
Dialogue: 0,0:01:27.27,0:01:29.56,Default,,0000,0000,0000,,about this marginal\Nproduct of labor.
Dialogue: 0,0:01:29.56,0:01:33.98,Default,,0000,0000,0000,,First, it declines\Nas more labor is added.
Dialogue: 0,0:01:33.98,0:01:37.53,Default,,0000,0000,0000,,And this is because the first laborer\Ngoes to the most important task,
Dialogue: 0,0:01:37.53,0:01:40.75,Default,,0000,0000,0000,,the second laborer goes\Nto the second most important task
Dialogue: 0,0:01:40.75,0:01:42.03,Default,,0000,0000,0000,,and so forth.
Dialogue: 0,0:01:42.03,0:01:46.68,Default,,0000,0000,0000,,Moreover, firms\Nwill hire workers, laborers,
Dialogue: 0,0:01:46.68,0:01:51.52,Default,,0000,0000,0000,,as long as the wage is less\Nthan the marginal product of labor.
Dialogue: 0,0:01:51.52,0:01:53.55,Default,,0000,0000,0000,,Let's take a look\Nat this in a table.
Dialogue: 0,0:01:54.03,0:01:56.87,Default,,0000,0000,0000,,This table shows how\Na restaurant like McDonald’s
Dialogue: 0,0:01:56.87,0:01:59.24,Default,,0000,0000,0000,,might think about hiring janitors.
Dialogue: 0,0:01:59.24,0:02:02.74,Default,,0000,0000,0000,,The first janitor is assigned\Nto the most important task --
Dialogue: 0,0:02:02.74,0:02:04.82,Default,,0000,0000,0000,,cleaning the restrooms once a day.
Dialogue: 0,0:02:04.82,0:02:09.64,Default,,0000,0000,0000,,That task adds $35\Nan hour to the firm’s revenues.
Dialogue: 0,0:02:09.64,0:02:12.75,Default,,0000,0000,0000,,Customers like restaurants\Nwith clean restrooms.
Dialogue: 0,0:02:12.75,0:02:15.06,Default,,0000,0000,0000,,The second janitor empties the trash,
Dialogue: 0,0:02:15.06,0:02:18.59,Default,,0000,0000,0000,,the third janitor hired will also\Nbe assigned to cleaning restrooms,
Dialogue: 0,0:02:18.59,0:02:20.39,Default,,0000,0000,0000,,now done twice a day --
Dialogue: 0,0:02:20.39,0:02:25.05,Default,,0000,0000,0000,,and that use increases revenues\Nby less -- by $24 an hour.
Dialogue: 0,0:02:25.05,0:02:27.14,Default,,0000,0000,0000,,The demand curve for labor
Dialogue: 0,0:02:27.14,0:02:30.25,Default,,0000,0000,0000,,is derived from\Nthe marginal product of labor.
Dialogue: 0,0:02:30.25,0:02:32.98,Default,,0000,0000,0000,,Notice that as the wage goes down,
Dialogue: 0,0:02:32.98,0:02:36.72,Default,,0000,0000,0000,,the firm will want to hire\Nmore and more janitors
Dialogue: 0,0:02:36.72,0:02:39.73,Default,,0000,0000,0000,,and as the firm hires\Nmore and more janitors,
Dialogue: 0,0:02:39.73,0:02:42.11,Default,,0000,0000,0000,,the marginal product of labor falls.
Dialogue: 0,0:02:42.41,0:02:45.85,Default,,0000,0000,0000,,So let's take a closer look\Nat this derivation.
Dialogue: 0,0:02:47.41,0:02:49.65,Default,,0000,0000,0000,,Here's the marginal product\Nof labor schedule
Dialogue: 0,0:02:49.65,0:02:53.36,Default,,0000,0000,0000,,and here is the demand for labor\Nderived from that schedule.
Dialogue: 0,0:02:53.36,0:02:57.80,Default,,0000,0000,0000,,Notice that if the wage\Nwere greater than $35 an hour
Dialogue: 0,0:02:57.80,0:03:00.50,Default,,0000,0000,0000,,the firm would demand no janitors.
Dialogue: 0,0:03:00.50,0:03:03.16,Default,,0000,0000,0000,,That's because\Nthe very first janitor
Dialogue: 0,0:03:03.16,0:03:06.53,Default,,0000,0000,0000,,adds $35 an hour\Nto the firm's revenues.
Dialogue: 0,0:03:06.53,0:03:10.43,Default,,0000,0000,0000,,If the wage is higher than that,\Nthat janitor is not worth hiring.
Dialogue: 0,0:03:10.98,0:03:12.97,Default,,0000,0000,0000,,As the wage falls, however,
Dialogue: 0,0:03:12.97,0:03:16.35,Default,,0000,0000,0000,,more and more janitors\Nbecome worthwhile to hire.
Dialogue: 0,0:03:16.35,0:03:20.15,Default,,0000,0000,0000,,If the market wage were $10,\N7 janitors would be hired.
Dialogue: 0,0:03:20.15,0:03:24.51,Default,,0000,0000,0000,,If the market wage were $30,\Nonly 1 janitor would be hired.
Dialogue: 0,0:03:24.51,0:03:27.86,Default,,0000,0000,0000,,Now this is the demand for janitors\Nfrom a single firm.
Dialogue: 0,0:03:27.86,0:03:31.23,Default,,0000,0000,0000,,Now consider summing up\Nthe quantity of janitors
Dialogue: 0,0:03:31.23,0:03:36.09,Default,,0000,0000,0000,,demanded at each wage\Nfor all the firms in the market.
Dialogue: 0,0:03:36.09,0:03:39.95,Default,,0000,0000,0000,,That's how we get\Nto the market demand for janitors.
Dialogue: 0,0:03:39.95,0:03:42.08,Default,,0000,0000,0000,,So let's go to the market demand.
Dialogue: 0,0:03:42.38,0:03:45.22,Default,,0000,0000,0000,,So here's the market for janitors\Nin the United States.
Dialogue: 0,0:03:45.22,0:03:48.24,Default,,0000,0000,0000,,We have a demand curve derived\Nfrom the marginal product of labor
Dialogue: 0,0:03:48.24,0:03:49.70,Default,,0000,0000,0000,,and a supply curve.
Dialogue: 0,0:03:49.70,0:03:52.23,Default,,0000,0000,0000,,The supply curve says\Nthat as the wage increases
Dialogue: 0,0:03:52.23,0:03:55.58,Default,,0000,0000,0000,,the quantity of janitors supplied\Nwill also increase.
Dialogue: 0,0:03:55.58,0:03:57.68,Default,,0000,0000,0000,,That's intuitive\Nbut I want to say a little bit more
Dialogue: 0,0:03:57.68,0:03:59.85,Default,,0000,0000,0000,,about the supply curve in a moment
Dialogue: 0,0:03:59.85,0:04:02.11,Default,,0000,0000,0000,,because there's\None possible complication
Dialogue: 0,0:04:02.11,0:04:03.64,Default,,0000,0000,0000,,which we should discuss.
Dialogue: 0,0:04:03.64,0:04:06.35,Default,,0000,0000,0000,,For now, however,\Nlet's focus on the main point,
Dialogue: 0,0:04:06.35,0:04:09.73,Default,,0000,0000,0000,,which is that the wage\Nis determined as usual
Dialogue: 0,0:04:09.73,0:04:11.86,Default,,0000,0000,0000,,by the point\Nwhere the quantity demanded
Dialogue: 0,0:04:11.86,0:04:13.47,Default,,0000,0000,0000,,is equal to the quantity supplied --
Dialogue: 0,0:04:13.47,0:04:16.22,Default,,0000,0000,0000,,the intersection of the demand\Nand the supply curve.
Dialogue: 0,0:04:16.22,0:04:17.28,Default,,0000,0000,0000,,In the United States,
Dialogue: 0,0:04:17.28,0:04:20.44,Default,,0000,0000,0000,,the wage for janitors\Nis about $10 an hour
Dialogue: 0,0:04:20.44,0:04:24.54,Default,,0000,0000,0000,,and the quantity supplied\Nis about 168 million hours per week.
Dialogue: 0,0:04:24.54,0:04:28.76,Default,,0000,0000,0000,,Overall, there are about 4.2 million\Njanitors in the United States.
Dialogue: 0,0:04:29.17,0:04:33.57,Default,,0000,0000,0000,,So the key here is really that we can\Nuse our tools of demand and supply
Dialogue: 0,0:04:33.57,0:04:35.77,Default,,0000,0000,0000,,to understand the market for labor.
Dialogue: 0,0:04:35.77,0:04:39.00,Default,,0000,0000,0000,,So we can predict what will happen\Nwith an increased demand for labor
Dialogue: 0,0:04:39.00,0:04:40.83,Default,,0000,0000,0000,,or a reduced supply.
Dialogue: 0,0:04:40.83,0:04:44.76,Default,,0000,0000,0000,,Other factors which might influence\Nthe demand and supply of labor --
Dialogue: 0,0:04:44.76,0:04:47.70,Default,,0000,0000,0000,,we now know\Nhow to analyze this market.
Dialogue: 0,0:04:48.51,0:04:51.52,Default,,0000,0000,0000,,Let's add one qualification\Nto the supply of labor.
Dialogue: 0,0:04:51.52,0:04:53.01,Default,,0000,0000,0000,,We need to make a distinction
Dialogue: 0,0:04:53.01,0:04:55.82,Default,,0000,0000,0000,,between an individual’s\Nsupply curve for labor
Dialogue: 0,0:04:55.82,0:04:58.44,Default,,0000,0000,0000,,and the market\Nsupply curve for labor.
Dialogue: 0,0:04:58.44,0:05:02.26,Default,,0000,0000,0000,,So let's suppose we have a janitor --\Nlet's call him Joe --
Dialogue: 0,0:05:02.26,0:05:07.33,Default,,0000,0000,0000,,and let's imagine that his wage\Nis currently $16 an hour
Dialogue: 0,0:05:07.33,0:05:10.06,Default,,0000,0000,0000,,and he's working 40 hours a week.
Dialogue: 0,0:05:10.06,0:05:12.76,Default,,0000,0000,0000,,If the wage were\Nto increase to $20 an hour,
Dialogue: 0,0:05:12.76,0:05:16.68,Default,,0000,0000,0000,,Joe decides he may work more,\N50 hours per week,
Dialogue: 0,0:05:16.68,0:05:19.01,Default,,0000,0000,0000,,in order to take advantage\Nof that higher wage.
Dialogue: 0,0:05:19.46,0:05:24.34,Default,,0000,0000,0000,,But now suppose that the wage\Nincreases even more to $28 an hour.
Dialogue: 0,0:05:24.34,0:05:29.69,Default,,0000,0000,0000,,Well, will Joe choose to work more\Nat $28 an hour than he did at $20?
Dialogue: 0,0:05:30.03,0:05:31.42,Default,,0000,0000,0000,,Not necessarily.
Dialogue: 0,0:05:31.42,0:05:34.23,Default,,0000,0000,0000,,After all, there's only\Nso many hours in the week.
Dialogue: 0,0:05:34.23,0:05:37.16,Default,,0000,0000,0000,,Anyway, Joe has other things\Nto do with his time.
Dialogue: 0,0:05:37.16,0:05:38.76,Default,,0000,0000,0000,,Now that his wage is higher,
Dialogue: 0,0:05:38.76,0:05:41.26,Default,,0000,0000,0000,,Joe might want\Nto take his family on a vacation.
Dialogue: 0,0:05:41.26,0:05:43.94,Default,,0000,0000,0000,,His income\Nis pretty high as well now --
Dialogue: 0,0:05:43.94,0:05:46.46,Default,,0000,0000,0000,,$28 an hour, 40 hours a week,
Dialogue: 0,0:05:46.46,0:05:50.62,Default,,0000,0000,0000,,Joe may decide he in fact\Nwould like to work a little bit less.
Dialogue: 0,0:05:50.62,0:05:54.14,Default,,0000,0000,0000,,He in fact would like\Nto buy more leisure
Dialogue: 0,0:05:54.14,0:05:57.24,Default,,0000,0000,0000,,with the income\Nwhich he is earning from his job.
Dialogue: 0,0:05:58.22,0:06:01.33,Default,,0000,0000,0000,,So an individual’s labor supply curve
Dialogue: 0,0:06:01.33,0:06:05.04,Default,,0000,0000,0000,,could possibly have\Na backward bending component.
Dialogue: 0,0:06:05.04,0:06:08.17,Default,,0000,0000,0000,,There's nothing irrational\Nor peculiar about that.
Dialogue: 0,0:06:08.17,0:06:09.99,Default,,0000,0000,0000,,Although it's possible for an individual
Dialogue: 0,0:06:09.99,0:06:12.80,Default,,0000,0000,0000,,to have a backward bending\Nlabor supply component,
Dialogue: 0,0:06:12.80,0:06:15.79,Default,,0000,0000,0000,,it's less likely\Nfor the market as a whole,
Dialogue: 0,0:06:15.79,0:06:19.31,Default,,0000,0000,0000,,because even as the wage\Nfor janitors increases
Dialogue: 0,0:06:19.31,0:06:21.50,Default,,0000,0000,0000,,and Joe works a little bit less,
Dialogue: 0,0:06:21.50,0:06:25.25,Default,,0000,0000,0000,,there are lots of other people --\NMary, and Jose and Rita --
Dialogue: 0,0:06:25.25,0:06:29.16,Default,,0000,0000,0000,,who are currently employed,\Nsay waiting tables or as sales staff,
Dialogue: 0,0:06:29.16,0:06:31.98,Default,,0000,0000,0000,,who would be willing\Nto work in janitorial services
Dialogue: 0,0:06:31.98,0:06:33.89,Default,,0000,0000,0000,,if the wage were higher.
Dialogue: 0,0:06:34.21,0:06:36.70,Default,,0000,0000,0000,,So consider a wage of $20 an hour --
Dialogue: 0,0:06:36.70,0:06:41.32,Default,,0000,0000,0000,,the market supply has 320 million\Nhours of janitorial services.
Dialogue: 0,0:06:41.32,0:06:43.89,Default,,0000,0000,0000,,As the wage goes up to $28,
Dialogue: 0,0:06:43.89,0:06:46.50,Default,,0000,0000,0000,,well Joe works a little bit less,
Dialogue: 0,0:06:46.50,0:06:48.49,Default,,0000,0000,0000,,and maybe some\Nof the other people in the industry
Dialogue: 0,0:06:48.49,0:06:49.71,Default,,0000,0000,0000,,work a little bit less --
Dialogue: 0,0:06:49.71,0:06:51.81,Default,,0000,0000,0000,,people who are\Nalready in the industry --
Dialogue: 0,0:06:51.81,0:06:56.13,Default,,0000,0000,0000,,but more people enter the market\Nfor janitorial services
Dialogue: 0,0:06:56.13,0:07:00.28,Default,,0000,0000,0000,,when the wage is $28\Nthan when it was $20.
Dialogue: 0,0:07:00.28,0:07:02.87,Default,,0000,0000,0000,,So as the wage increases,
Dialogue: 0,0:07:02.87,0:07:07.05,Default,,0000,0000,0000,,the quantity supplied\Nof janitorial services increases
Dialogue: 0,0:07:07.05,0:07:08.78,Default,,0000,0000,0000,,for two reasons.
Dialogue: 0,0:07:08.78,0:07:12.26,Default,,0000,0000,0000,,The people who are\Nalready janitors may work more,
Dialogue: 0,0:07:12.26,0:07:14.13,Default,,0000,0000,0000,,but even more importantly,
Dialogue: 0,0:07:14.13,0:07:16.72,Default,,0000,0000,0000,,as the wage for janitors increases
Dialogue: 0,0:07:16.72,0:07:20.05,Default,,0000,0000,0000,,more people\Nenter the janitorial industry.
Dialogue: 0,0:07:20.05,0:07:24.20,Default,,0000,0000,0000,,So what this means\Nis that our labor supply curve
Dialogue: 0,0:07:24.20,0:07:27.00,Default,,0000,0000,0000,,will typically have our usual shape --
Dialogue: 0,0:07:27.00,0:07:29.52,Default,,0000,0000,0000,,an upward sloped\Nlabor supply curve.
Dialogue: 0,0:07:29.52,0:07:32.16,Default,,0000,0000,0000,,Even when some individuals\Nmight have a backward slope
Dialogue: 0,0:07:32.16,0:07:34.45,Default,,0000,0000,0000,,over some portion of the curve,
Dialogue: 0,0:07:34.45,0:07:37.29,Default,,0000,0000,0000,,the market slope\Nis going to have our typical shape.
Dialogue: 0,0:07:38.02,0:07:40.18,Default,,0000,0000,0000,,So why do janitors\Nin the United States
Dialogue: 0,0:07:40.18,0:07:42.63,Default,,0000,0000,0000,,earn more than janitors in India?
Dialogue: 0,0:07:42.63,0:07:44.17,Default,,0000,0000,0000,,After all, they're doing\Npretty much the same thing --
Dialogue: 0,0:07:44.17,0:07:45.99,Default,,0000,0000,0000,,sweeping floors and so forth.
Dialogue: 0,0:07:45.99,0:07:49.64,Default,,0000,0000,0000,,It certainly isn't the case\Nthat janitors in the United States
Dialogue: 0,0:07:49.64,0:07:53.83,Default,,0000,0000,0000,,are sweeping more floors per hour\Nor working so many more hours.
Dialogue: 0,0:07:53.83,0:07:57.75,Default,,0000,0000,0000,,If you answered demand and supply,\Ngive yourselves half points.
Dialogue: 0,0:07:57.75,0:07:59.39,Default,,0000,0000,0000,,Let's go a little bit deeper.
Dialogue: 0,0:07:59.39,0:08:03.07,Default,,0000,0000,0000,,The demand for janitors\Nis higher in the United States
Dialogue: 0,0:08:03.07,0:08:06.50,Default,,0000,0000,0000,,because the United States\Nis a more productive economy
Dialogue: 0,0:08:06.50,0:08:07.93,Default,,0000,0000,0000,,than the Indian economy.
Dialogue: 0,0:08:07.93,0:08:10.16,Default,,0000,0000,0000,,There's more and better\Ncapital to work with,
Dialogue: 0,0:08:10.16,0:08:12.39,Default,,0000,0000,0000,,the office workers\Nare more productive,
Dialogue: 0,0:08:12.39,0:08:16.80,Default,,0000,0000,0000,,and the American office\Nproduces a more valuable product.
Dialogue: 0,0:08:16.80,0:08:19.49,Default,,0000,0000,0000,,The result\Nis that it's more valuable
Dialogue: 0,0:08:19.49,0:08:21.85,Default,,0000,0000,0000,,to keep a U.S. office building clean --
Dialogue: 0,0:08:21.85,0:08:25.14,Default,,0000,0000,0000,,that's one of the reasons\Nwhy American janitors earn more.
Dialogue: 0,0:08:25.14,0:08:27.23,Default,,0000,0000,0000,,The demand\Nfor their services is higher.
Dialogue: 0,0:08:27.73,0:08:29.41,Default,,0000,0000,0000,,This is a useful reminder --
Dialogue: 0,0:08:29.41,0:08:31.61,Default,,0000,0000,0000,,you may have\Na number of valuable skills.
Dialogue: 0,0:08:31.61,0:08:33.18,Default,,0000,0000,0000,,Perhaps you're able\Nto program a computer,
Dialogue: 0,0:08:33.18,0:08:35.70,Default,,0000,0000,0000,,or write a report,\Nor motivate sales staff,
Dialogue: 0,0:08:35.70,0:08:36.92,Default,,0000,0000,0000,,and so forth.
Dialogue: 0,0:08:36.92,0:08:40.72,Default,,0000,0000,0000,,But your skills only have value\Nwithin a given context.
Dialogue: 0,0:08:40.72,0:08:42.82,Default,,0000,0000,0000,,If you were transplanted\Nto a different economy,
Dialogue: 0,0:08:42.82,0:08:44.90,Default,,0000,0000,0000,,your skills might be worth less --
Dialogue: 0,0:08:44.90,0:08:47.18,Default,,0000,0000,0000,,maybe because your skills\Nwould be less useful,
Dialogue: 0,0:08:47.18,0:08:51.06,Default,,0000,0000,0000,,but also because other people\Nmight not have the money
Dialogue: 0,0:08:51.06,0:08:52.58,Default,,0000,0000,0000,,to pay for your skills.
Dialogue: 0,0:08:53.15,0:08:55.46,Default,,0000,0000,0000,,It's better to be a barber\Nin a rich country
Dialogue: 0,0:08:55.46,0:08:57.28,Default,,0000,0000,0000,,than in a poor country,
Dialogue: 0,0:08:57.28,0:09:00.25,Default,,0000,0000,0000,,even when the same number\Nof people need a haircut.
Dialogue: 0,0:09:00.48,0:09:01.28,Default,,0000,0000,0000,,Okay.
Dialogue: 0,0:09:01.28,0:09:04.60,Default,,0000,0000,0000,,So that's one reason why janitors\Nin the United States earn more.
Dialogue: 0,0:09:04.60,0:09:06.93,Default,,0000,0000,0000,,The demand\Nfor their services is higher
Dialogue: 0,0:09:06.93,0:09:09.75,Default,,0000,0000,0000,,because the United States\Nis a more productive economy.
Dialogue: 0,0:09:10.63,0:09:13.49,Default,,0000,0000,0000,,Wages, of course,\Nare about demand and about supply.
Dialogue: 0,0:09:13.49,0:09:14.96,Default,,0000,0000,0000,,So here's the other half --
Dialogue: 0,0:09:14.96,0:09:18.35,Default,,0000,0000,0000,,India has more workers\Nthan in the United States,
Dialogue: 0,0:09:18.35,0:09:22.47,Default,,0000,0000,0000,,and in particular India\Nhas more low-skilled workers
Dialogue: 0,0:09:22.47,0:09:26.01,Default,,0000,0000,0000,,who eagerly compete\Nfor the job of janitor.
Dialogue: 0,0:09:26.01,0:09:29.60,Default,,0000,0000,0000,,A janitor could be\Na quite high paying job in India,
Dialogue: 0,0:09:29.60,0:09:31.96,Default,,0000,0000,0000,,a well-respected job in India.
Dialogue: 0,0:09:31.96,0:09:34.03,Default,,0000,0000,0000,,So Indian janitors earn less
Dialogue: 0,0:09:34.03,0:09:36.07,Default,,0000,0000,0000,,because U.S. firms\Nare more productive,
Dialogue: 0,0:09:36.07,0:09:37.79,Default,,0000,0000,0000,,the demand for labor is higher
Dialogue: 0,0:09:37.79,0:09:40.18,Default,,0000,0000,0000,,and also because the supply\Nof low-skilled workers
Dialogue: 0,0:09:40.18,0:09:42.03,Default,,0000,0000,0000,,is greater in India.
Dialogue: 0,0:09:43.12,0:09:45.60,Default,,0000,0000,0000,,Here's a graph\Nsummarizing what we just said.
Dialogue: 0,0:09:45.60,0:09:48.86,Default,,0000,0000,0000,,Here's the demand and supply\Nof janitors in the Unites States
Dialogue: 0,0:09:48.86,0:09:51.07,Default,,0000,0000,0000,,with the wage of $10 an hour.
Dialogue: 0,0:09:51.07,0:09:53.84,Default,,0000,0000,0000,,And here's the demand\Nand supply in India.
Dialogue: 0,0:09:53.84,0:09:55.95,Default,,0000,0000,0000,,The demand is lower,\Nthe supply is higher
Dialogue: 0,0:09:55.95,0:09:58.21,Default,,0000,0000,0000,,so the wage is lower.
Dialogue: 0,0:09:58.47,0:09:59.41,Default,,0000,0000,0000,,Okay.
Dialogue: 0,0:09:59.41,0:10:01.47,Default,,0000,0000,0000,,Next time we'll be\Nlooking at some of the factors
Dialogue: 0,0:10:01.47,0:10:03.22,Default,,0000,0000,0000,,which can increase wages,
Dialogue: 0,0:10:03.22,0:10:04.97,Default,,0000,0000,0000,,particularly human capital,
Dialogue: 0,0:10:04.97,0:10:07.70,Default,,0000,0000,0000,,and then we'll turn\Nto discrimination and other topics.
Dialogue: 0,0:10:08.96,0:10:10.63,Default,,0000,0000,0000,,- [Narrator]\NIf you want to test yourself,
Dialogue: 0,0:10:10.63,0:10:12.85,Default,,0000,0000,0000,,click "Practice questions."
Dialogue: 0,0:10:12.85,0:10:16.10,Default,,0000,0000,0000,,Or, if you're ready to move on,\Njust click, "Next Video."
Dialogue: 0,0:10:16.51,0:10:19.50,Default,,0000,0000,0000,,♪ [music] ♪