Labor and Saving, Part I

In the continued study of the full employment economy, we want to understand how many workers there are that want to work, and how many will be employed if the workforce is fully employed. Once we know all the output of the aggregate production of the economy, we also want to know how that will be allocated between consumption today and investment for the future. The question of full employment is thus: at what level of work is the amount of work that people in the economy want to offer to firms in return for their wages equal to the amount of work that businesses want to buy from workers in order to maximize profits? Labor is defined by the total number of workers willing to work in an economy. How does this work get measured and evaluated? Wages are a significant factor in this determination. This chapter also details the concept of the real wage and discusses labor supply and demand curves.

This video is licensed under the CC BY-NC-SA license.