chapter_2

chapter_2 - Chapter2 LaborSupply 1...

Info iconThis preview shows pages 1–13. Sign up to view the full content.

View Full Document Right Arrow Icon
  1 Chapter 2 Labor Supply
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
  2 Introduction to Labor Supply Labor facts Working men: decline in labor force  participation from 90% in 1947 to 75% in 1990 Working women: rise in labor force  participation from 32% in 1947 to 60% in 1990 Work hours fell from 40 to 35 per week during  the same time period
Background image of page 2
  3 Labor facts continued More women than men work part-time More men who are high school drop outs work  than women who are high school drop outs White men have higher labor force  participation rates (LFPR) and hours of work  than black men
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
  4 Average hours worked/week, 1900- 2005 30 35 40 45 50 55 60 1900 1920 1940 1960 1980 2000 2020 Year Weekly hours
Background image of page 4
  5 Measuring the Labor Force Current Population Survey (CPS) Labor Force = Employed + Unemployed LF = E + U Size of LF does not tell us about “intensity”  of work Labor Force Participation Rate LFPR = LF/P P = civilian adult population
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
  6 Measuring the Labor Force continued Employment: Population Ratio (percent of  population that is employed) EPR = E/P Unemployment Rate UR = U/LF
Background image of page 6
  7 Measurement Issues Labor Force measurement relies on subjectivity  and likely understates the effects of a recession Hidden unemployed: persons who have left the  labor force, giving up in their search for work EPR is a better measure of fluctuations in  economic activity than the UR
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
  8 Overview of the Labor Market                            Dec 2006 Population of USA Eligible Population/Potential Labor Force Civilian 15+ yrs old (230.108 m) Labor Force (LF) Working or actively seeking work Not in Labor Force (NLF) Students/Retired/Househol d workers and “Discouraged workers” (77.333m) Employed (E) (145.926m) Unemployed (U) Not working but looking for work (6.849m)
Background image of page 8
  9 Quick Review of Microeconomics Consumers’ goal: maximize their utility given the  limits imposed by their budget constraints. Two goods: X and Y  Prices: P X  and P Y Income: M   Utility function: U(X,Y)
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
  10 Review:  An individual has a series of indifference  curves representing preferences Y X U B U A 1. Indifference curves never cross. 2. Indifference curves are negatively sloped 3. Indifference curves are convex to the origin. 4. –Slope = MRS = MU X /MU Y = (dU/dX)/ (dU/dY)
Background image of page 10
  11 P X *X + P Y *Y = M or Y = – (P X /P Y )*X  + M/P Y Y intercept = M/P Y Slope = -(P X /P Y          = -MRS Review:  The budget constraint is drawn by  using the following equation:
Background image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
  12 Review:  Combining the budget constraint and the  utility function.
Background image of page 12
Image of page 13
This is the end of the preview. Sign up to access the rest of the document.

This document was uploaded on 09/04/2011.

Page1 / 124

chapter_2 - Chapter2 LaborSupply 1...

This preview shows document pages 1 - 13. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online