Labor Economics Lab

Labor Economics — Wages, Employment & Unions

Labor economics examines how wages and employment levels are determined through the interaction of worker supply and employer demand in competitive and non-competitive markets. This simulation models both competitive and monopsonistic labor markets, letting you set the minimum wage, introduce a union wage floor, or simulate employer market power and compare the resulting employment and welfare outcomes. The gap between wage and marginal revenue product is central to understanding exploitation and policy.

What you can do in this simulation

• Plot labor supply and demand curves and find the competitive wage and employment level
• Set a minimum wage above or below the equilibrium and observe employment effects
• Introduce monopsony employer market power and observe wage suppression below competitive level
• Add a union wage demand and trace the resulting bargaining outcome and employment change
• Measure deadweight loss from wage floors and monopsony distortions

Concepts covered

wage elasticity · monopsony · minimum wage · labor supply · marginal revenue product · union bargaining

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