9 Equilibrium%202 - !"#$%&"'( ")%*!*+&*%,'- Introduction to...

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")%*!*+&*%, - Introduction to Labor Economics +,#-. /,#0$
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.%$!*/" Review: Labor Market Equilibrium Estimating supply and demand elasticity Application: Minimum wage Theory Empirical Evidence
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E w D S E* w*
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E w D S E* w* Firm surplus Worker Surplus
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2%44!5 0/6 6",0/6 E w D S E* w* E*’ S’ D’
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"!02$*#*$5 .7 = % change in hours of work for a 1% change in wage
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"!02$*#*$5 .7 = % change in hours of work for a 1% change in wage How can we estimate this? ! " #$% " " What are the expected signs of ' and $ ?
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"!02$*#*$5 .7 Eissa and Liebman (1996): Natural Experiment: Expansion of EITC !"#$%&%'"$%() +"$, -,.(#, +"$, /.$,# 0%. 12%3%42, .(# 1567 89:;<= 8>:?<= 9:@<= A($ 12%3%42, .(# 1567 ;>:9<= ;>:9<= <= 9:@<=
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"!02$*#*$5 .7 = % change in hours of work for a 1% change in wage How can we estimate this? ! " #$% " " What are the expected signs of ' and $ ? **Not much consensus: Estimates of wage elasticity of prime age men ~0 Estimates of wage elasticity of women - large range.
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"!02$*#*$5 .7 = % change in labor demanded for a 1% change in wage How can we estimate this?
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"!02$*#*$5 .7 Card (1990) Natural Experiment: Mariel boatlift !"#$%&%'"$%() +"$, -,.(#, +"$, /.$,# 0%. B),C'2(DC,)$ #"$, (. // %) E%"C% F:?<= ;:G<= H:?<= B),C'2(DC,)$ #"$, (. // %) H<:?<= H9:G<= 9:?<= JH:<<=
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This note was uploaded on 01/19/2011 for the course ECON ECON 440 taught by Professor Kristinebrown during the Fall '10 term at University of Illinois at Urbana–Champaign.

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9 Equilibrium%202 - !"#$%&"'( ")%*!*+&*%,'- Introduction to...

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