backward-bending labor supply curve  the situation in which the income effect outweighs the substitution effect of an increase in the wage at higher levels of income, causing the labor supply curve to bend back and take on a negative slope.
bilateral monopoly  the situation in which there is one buyer and one seller in a market.
compensating wage differential  a difference in wages for people with similar skills based on some characteristic of the job, such as riskiness, discomfort, or convenience of the time schedule.
craft union  a union organized to represent a single occupation, whose members come from a variety of industries.
derived demand  demand for an input derived from the demand for the product produced with that input.
fringe benefits  compensation that a worker receives excluding direct money payments for time worked: insurance, retirement benefits, vacation time, and maternity and sick leave.
human capital  a person’s accumulated knowledge and skills.
industrial union  a union organized within a given industry, whose members come from a variety of occupations.
labor demand  the relationship between the quantity of labor demanded by firms and the wage.
labor market  the market in which individuals supply their labor time to firms in exchange for wages and salaries.
labor market equilibrium  the situation in which the quantity supplied of labor equals the quantity demanded of labor.
labor productivity  output per hour of work.
labor supply  the relationship between the quantity of labor supplied by individuals and the wage.
labor union  a coalition of workers, organized to improve the wages and working conditions of the members.
marginal product of labor  the change in production due to a one-unit increase in labor input.
marginal revenue product of labor  the change in total revenue due to a one-unit increase in labor input.
monopsony  a situation in which there is a single buyer of a particular good or service in a given market.
on-the-job training  the building of the skills of a firm’s employees while they work for the firm.
piece-rate system  a system by which workers are paid a specific amount per unit they produce.
real wage  the wage or price of labor adjusted for inflation; in contrast, the nominal wage has not been adjusted for inflation.
wage  the price of labor defined over a period of time worked.