eco106 unit 7 discussion board on market for labor

Chapter 17

Who Is Zach Greinke and Why Is He Being Paid $147 Million?

Zach Greinke is a major league baseball player who won the Cy Young award as the best pitcher in the American League in 2009. Following the 2012 season, Greinke became a free agent and signed a contract with the Los Angeles Dodgers that will pay him $147 million over six years. In 2013, the Dodgers sold the rights to televise their games to Time Warner for more than $6 billion over a 25-year period. Because of the revenues the Dodgers earn from ticket sales, cable television, broadcast television, and radio, they can afford to pay more for players than teams that play in smaller cities. We use some of the same concepts we used to explain the demand and supply of goods and services to analyze the demand and supply of labor and other factors of production. But there are important ways in which the markets for factors of production are not like the markets for goods. In factor markets, firms are demanders, and households are suppliers. And in labor markets, concepts of fairness arise more frequently than in markets for goods and services.

Discussion Question:

According to an article in the Wall Street Journal:

Through the 1990s, U.S.-bound immigration was split between the poor fleeing hunger or oppression and wealthy elites seeking high-paying jobs. Now, more middle-class, middle-skilled emigrants are heading to the U.S.

Most of the “middle-class, middle-skilled emigrants” referred to in the article were legal immigrants to the United States. Suppose that more effective border control measures reduce the number of low-skilled, illegal immigrants to the United States and the fraction of immigrants who are “middle-skilled” increases significantly. What difference would this change make on the economic impact of immigration? Would it be likely to affect the political debate over immigration?

Source: Joel Millman, “Tidy Business: Immigrant Group Puts a New Spin On Cleaning Niche,” Wall Street Journal, February 16, 2006.

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