© 2002 mcgraw-hill ryerson ltd.chapter 1-1 chapter one introduction to labour market economics...
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![Page 1: © 2002 McGraw-Hill Ryerson Ltd.Chapter 1-1 Chapter One Introduction to Labour Market Economics Created by: Erica Morrill, M.Ed Fanshawe College](https://reader036.vdocument.in/reader036/viewer/2022062407/56649dd85503460f94acdb64/html5/thumbnails/1.jpg)
© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-1
Chapter One
Introduction to Labour Market Economics
Created by: Erica Morrill, M.Ed Fanshawe College
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-2
Chapter FocusMain actors and rolesLabour supply and demandPolicy QuestionsCharacteristics of marketNeoclassical and alternative
approaches
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-3
Labour Market Participants
IndividualsFirmsGovernment
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-4
Decisions by Individuals When to enter the labour force How much education/training Type/extent of job search Occupation/Industry Labour hours/household work Accept/quit/ relocation Wage rate Union/association
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-5
Labour Market Behaviour
Positive Aspects
Obtaining a job Promotion Increase in wage
rate Benefits
Negative Aspects
Unemployment Job displacement Discrimination Poverty
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-6
Decisions by Employers # of workersWages/benefitsHoursLayoff /bankruptcySubcontractPension/retirement policy
Global Competition
Legislative Environment
Changing Workforce
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-7
Global Competition Influences
Free trade Industrial restructuringDeregulationPrivatization
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-8
Changing Workforce
AgeGenderEthnic diversity
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-9
Legislative Environment
Human Rights Minimum wage Overtime Maternity leave Worker’s compensation Occupational health/safety Pensions/mandatory retirement Labour laws/collective bargaining
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-10
individual rights vs. employer competitiveness public support
Training Insurance Compensation Pensions Vocational rehabilitation
Decisions by Government
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-11
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.
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-12
Dimensions of Labour Supply
Quantity DimensionsPopulation growthLabour force participationWork hours
part-time overtime flex-time
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-13
Dimensions of Labour Supply
Quality DimensionsHuman capital investments
education, training, health mobility
Work effort/intensity
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-14
Dimensions of Labour Supply
Incentive effects of income maintenance and tax-transfer schemes wage subsidies income taxes insurance welfare disability pension plans
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-15
Dimensions of Labour DemandThe firm’s demand for labour are based
on: labour costs firms output
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-16
Supply and Demand
The interaction between supply and demand determines wages employment unemployment
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-17
Table 1.1 Sources of Income for Individual Canadians, 1994
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-18
Figure 1.1 The Distribution of Individual Labour Earnings, 1994
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-19
Figure 1.2 The Distribution of Individual Annual Hours Worked, 1994
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-20
The Supply and Demand ModelKey assumptions in the neoclassical
model: behavioural assumptions
how buyers and sellers respond to prices and other factors
interaction of buyers and sellers and level and terms of market exchange
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-21
Figure 1.4 Wages and Employment in a Competitive Labour Market
NS
Employment
Wages
ND
W*
N*
W’
ND’ NS’
Supply >Demand
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-22
Current Policy IssuesConcerns for both public and private
policymakersSupply DemandWage determination and wage structure Unemployment
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-23
Similarities/Differences Between Labour Market and Other Markets
Various actors/goals three with different objectives or agendas
Sociological, institutional and legislative constraints
Market imperfections imperfect/asymmetric information costs uncertainty and risk
Complex price serving a variety of functions wage reflects a variety of factors
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-24
Alternative Perspectives
Neoclassical InstitutionalismDualismRadicalism
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© 2002 McGraw-Hill Ryerson Ltd. Chapter 1-25
End of Chapter One