Labor Demand 1 - LECTURE 6 LABOR DEMAND 1 Introduction to...

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LECTURE 6 LABOR DEMAND 1 Introduction to Labor Economics Economics 440 Prof. Brown
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OUTLINE Problem set 1 – Due Now Finish up family labor supply Labor demand model: Firm decision Short run Long run
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COORDINATE LABOR SUPPLY H M ($) 2000 -2 4000 5000 Jerry works (And Jaime spends 100 hrs in home production 7000 Jaime works (And Jerry works100 hrs) -1.25 Budget set if J & J spend equal time in H & M Complete specialization Jerry works 100 hours in M Jaime spends 100 hours in H
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EMPIRICAL EVIDENCE ON MARRIAGE 1. Dickert-Conlin, Meghea (2002) One can collect Social Security on spouse’s record. Once divorced? Can still collect on spouses record if married long enough: Divorce before 1979: 20 years Divorce after 1979: 10 years Findings: decrease in divorce rates at 9 years of marriage, increase at 10 years.
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EMPIRICAL EVIDENCE ON FERTILITY 1. Chandra, Dickert-Conlin (1999) Is timing of child birth affected by taxes? A child born at any time of year – tax deduction for the whole year More children born in the last week of Dec. vs. the first week of Jan. Estimate a 10% increase in tax benefit raises the prob. child born in Dec. by 2.7%
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EMPIRICAL EVIDENCE ON FERTILITY 1. Milligan (2002) Pro-child policy in Quebec Up to C$8000 to families having newborn Treatment group – Women in Quebec Control group – Women in other Canadian Provinces 25% increase in fertility among eligible families C$1000 increase in first year benefits increases the prob. have child by 16.9%
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DIVORCE IS GOOD FOR WOMEN Name 3 reasons that divorce rates may have increased? What did you find surprising/interesting? Do you agree with the author’s conclusion?
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LABOR SUPPLY REVIEW L C U 0 L* C* h* Slope of BC ൌെݓ Slope of IC ൌെܯܴܵൌ ିெ௎ ெ௎ Utility Maximization: 1. w = MRS 2. Make it affordable ࡯ൌ࢝ࢎ൅ࢂ
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LABOR SUPPLY E w D S
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DEMAND FOR LABOR Assume input and output markets are perfectly competitive – the firm is a price taker
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FIRMS MAXIMIZE PROFIT Assume firm objective is to maximize profit.
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This note was uploaded on 10/28/2011 for the course ECON 440 taught by Professor Brown during the Fall '08 term at University of Illinois at Urbana–Champaign.

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Labor Demand 1 - LECTURE 6 LABOR DEMAND 1 Introduction to...

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