Chapter 01 - Lecture Outline

Chapter 01 - Lecture Outline - Chapter One Chapter One...

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Unformatted text preview: Chapter One Chapter One Introduction to Labour Market Economics Chapter 1 1 Main Players and their Roles Main Players and their Roles • Individuals’ Decisions When to enter the labour force How much education/training Type/extent of job search Occupation/industry Labour hours/household work Accept/quit/relocate Wage rate Union/association Chapter 1 2 Main Players and their Roles Main Players and their Roles • Firms’ Decisions # of workers Wages/benefits Hours Layoff/bankruptcy Subcontract Pension/retirement policy Chapter 1 3 Main Players and their Roles Main Players and their Roles Factors Influencing the Firm’s Decision • Global Competition: Free trade, Industrial restructuring, Deregulation, Privatization • Legislative Environment: Human Rights, Minimum wage, Overtime, Maternity leave, Worker’s compensation, Occupational health/safety, Pensions/mandatory retirement, Labour laws/collective bargaining • Changing Workforce: Age, Gender, Ethnic diversity Chapter 1 4 Main Players and their Roles Main Players and their Roles • Government’s Decisions Individual rights vs. employer competitiveness Public support Training Insurance Compensation Pensions Vocational rehabilitation Chapter 1 5 Labour Market Outcomes Chapter 1 6 Labour Market Outcomes Chapter 1 7 Labour Market Outcomes Chapter 1 8 Labour Market Outcomes Chapter 1 9 Labour Market Economics Involves analyzing the determinants of the various dimensions of labour supply and demand and their interaction in alternative market structures to determine wages, employment, and unemployment. Chapter 1 10 Labour Supply and Demand Labour Supply and Demand • Dimensions of Labour Supply • Dimensions of Labour Demand Chapter 1 11 Labour Supply and Demand Labour Supply and Demand Dimensions of Labour Supply • Quantity Dimensions: Population Growth, Labour Force Participation… • Quality Dimensions: Education, Health, Labour Productivity… • The Impact of Income Maintenance Programs: Welfare, Disability, Employment Insurance… Chapter 1 12 Labour Supply and Demand Labour Supply and Demand Dimensions of Labour Demand • Labour Costs and the Firm’s Hiring Decisions: The impact of quasi­fixed costs and legislatively imposed costs… • Demand for the Firm’s Output and the Firm’s Competitiveness: Globalization, Industrial restructuring, Free trade, Technological advancements… Chapter 1 13 Labour Supply and Demand Labour Supply and Demand • Labour Market Outcomes: Wages, Employment, Unemployment, Labour Shortages, and Wage Differentials… • Factors Influencing the Outcomes: Legislative Interventions, Unions and Collective Bargaining, the Market Structures (in both the product and the labour markets)… Chapter 1 14 The Neoclassical Model of Labour The Neoclassical Model of Labour Supply and Demand Key Ingredients: • Behavioural Assumptions: • Interaction between Buyers and Sellers: Consumer/Buyer (Consumer Choice Theory) Producer/Seller (Theory of the Firm) Wage and Employment in a Competitive Labour Market: Market Clearing Outcome Chapter 1 15 Wages and Employment in a Competitive Labour Market—A Neoclassical Model Chapter 1 16 The Neoclassical Model of Labour Supply The Neoclassical Model of Labour Supply and Demand—Two Sector Case Chapter 1 17 The Neoclassical Model of Labour Supply The Neoclassical Model of Labour Supply and Demand—Two Sector Case Chapter 1 18 Policy Issues Policy Issues Labour market economics should be able to shed light on policy issues affecting: • • • • Chapter 1 Labour Supply Labour Demand Wage Determination and Wage Structures Unemployment 19 Policy Issues Policy Issues • Labour Supply: Work incentive effects of income maintenance and tax transfer programs such as employment insurance, welfare, subsidized day care… • Labour Demand: The labour demand effects of globalization and outsourcing, trade policies, collective bargaining, legislative policies with respect to minimum wages, human rights, workplace health and safety… Chapter 1 20 Policy Issues Policy Issues • Wage Determination and Wage Structures: Wage polarization, non­wage benefits, male­ female wage differentials, pay equity legislation, retirement, and pensions… • Unemployment: Changes in unemployment rate, job stability, impact of employment insurance on unemployment, youth unemployment… Chapter 1 21 Characteristics of the Labour Market Characteristics of the Labour Market The Labour market differs, mostly in degree and not in kind, in the following ways compared with the other markets: 1. The Stakeholders Labour, Management, and Government 1. Sociological Family and Community Ties, Role of Women, and Social Norms 1. Institutional Chapter 1 Unions and Multinational Corporations 22 Characteristics of the Labour Market Characteristics of the Labour Market 1. Legislative Constraint Minimum Wage Laws, Safety and Health Regulations, Employment Insurance, and Pensions 1. Market Imperfections Asymmetric Information, Uncertainty, and Risk 1. Complex Price (Wage Rate) Implications Reflecting Returns to Investment in Education, Training and Mobility, Compensation for Risk and Undesirable Working Conditions, Union Power, Productivity, Standard of Living, Issues of Efficiency and Equity, etc. Chapter 1 23 Alternative Perspectives 1. Neoclassical 1. Institutionalism 1. Dualism 1. Radicalism Emphasis on the theoretical foundation of the labour market and market clearing forces Emphasis on the descriptive realism and the roles of institutions, customs, and sociopolitical factors Chapter 1 Based on segmented labour market tradition: primary and secondary Emphasis on the class conflicts as the main determinant of the labour market outcomes 24 ...
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