Chapter 1: Labor Economics Flashcards
is considered an important sub-discipline of Economics.
Labor economics
In labor economics, economic theories and models are analyzed at two levels. These two levels involve
microeconomic and macroeconomic analysis.
includes the behavior and decision
making of individual entities such as workers and firms labor and the determination of wage or earnings in the
labor market.
Microeconomic analysis
examines how the interactions the labor market actors affect the
overall performance of the economy as a such as unemployment employment and unemployment levels,
labor force participation rates, aggregate income, and economic growth.
Macroeconomic analysis
According to whom labor economics studies how labor markets work. It is an economic analysis of
how workers, firms and the government interact in shaping the outcomes in the labor market. It analyzes the
behavior and the relationship between employees and employers
Borjah (2016)
It is an economic analysis of
how workers, firms and the government interact in shaping the outcomes in the labor market. It analyzes the
behavior and the relationship between employees and employers
Labor Economics
looks into different issues problems in the labor market and weighs the costs and benefits
of policies and measures than can address these labor market concerns
Labor Economics
helps us understand and address many of the social and
economic problems facing modern societies.
Labor economics,
It helps economists to understand labor-related problems such
as issues on fair wage, welfare of workers, labor productivity, workers safety, gender-related matters, job
security, and job satisfaction.
Labor economics,
examines the labor market and its peculiarities. It addresses different topics such as wages,
human capital, productivity, labor force, and unemployment and offers solutions on policy issues concerning
the labor experiences of particular groups of workers or various aspects of the employment relationship
between workers and firms
Labor economics
- Why did the labor force participation of women rise steadily throughout the past century in many
industrialized countries? - What is the impact of immigration on the wage and employment opportunities of native-born workers?
- Do minimum wages increase the unemployment rate of less-skilled workers?
- What is the impact of occupational safety and health regulations on employment and earnings?
- Are government subsidies of investments in human capital an effective way to improve the economic
well-being of disadvantaged workers? - Why did wage inequality in the country rise so rapidly?
- What is the impact of affirmative action programs on the earnings of women and minorities and on
the number of women and minorities that firms hire? - What is the economic impact of unions, both on their members and on the rest of the economy?
- Do generous unemployment insurance benefits lengthen the duration of spells of unemployment?
- Do sharply increased wages actually have an impact on employment?
The policy issues examined by modern labor economics
Give some policy issues examined by modern labor economics
- Why did the labor force participation of women rise steadily throughout the past century in many
industrialized countries? - What is the impact of immigration on the wage and employment opportunities of native-born workers?
- Do minimum wages increase the unemployment rate of less-skilled workers?
- What is the impact of occupational safety and health regulations on employment and earnings?
- Are government subsidies of investments in human capital an effective way to improve the economic
well-being of disadvantaged workers? - Why did wage inequality in the country rise so rapidly?
- What is the impact of affirmative action programs on the earnings of women and minorities and on
the number of women and minorities that firms hire? - What is the economic impact of unions, both on their members and on the rest of the economy?
- Do generous unemployment insurance benefits lengthen the duration of spells of unemployment?
- Do sharply increased wages actually have an impact on employment?
One of the most important economic resources or inputs of
production is
labor.
_________is the work time and work effort that people devote to producing goods and services. This includes
the physical and mental efforts of all the people who work on farms, construction sites, factories, shops,
offices, etc
Labor
A nurse working in a hospital is considered to be a labor resource. The services rendered by a
teacher and an economist are also examples of labor resources.
Labor
At a macro level,____________refers to the employed individuals in the labor force.
Labor
A country’s labor force is the sum
of
employment and unemployment
is a visual model that depicts how money, goods, and services flow
through markets between households and firms in the economy. In this model, the economy is simplified as
there are only two sectors—firms and households.
The Circular Flow of Income Model
the model assumes that there is no government
intervention, the economy is closed, households sp
circular flow of income
economic
resources flow from households to firms,
and goods and services flow from firms
to households.
(inner loop)
The households sell land,
labor, and capital to the firms in the
resource market. These resources will be
organized by firms to produce goods and
services. The output will then be sold to
households in the product market.
(inner loop)
spending on goods and services flows
from households to firms, and income
flows from firms to households. The
households receive income in the form of
rent, wage, and interest as payments for
providing these resources. The income
will then be used to buy goods in the product market.
The other direction (outer loop),
arranges the interaction of workers (employees) and firms (employers). I
The labor market
It is a place where
the supply and the demand for jobs take place because households sell their labor as workers to business
firms.
The labor market
functions to allocate human resources among sectors, businesses, locations and
occupations and distribute incomes as rewards to workers.
The labor market
Objectives of the Labor Market
Efficiency, Equity, Growth. Social justice.
This is associated with achieving maximum output with minimum amount of waste,
specialization (division of labor).
Efficiency
It implies equal opportunity for all to access to jobs, training, treatment at work, and wages.
Equity.
This requires higher labor productivity and full employment.
Growth.
It lessens any negative effects labor markets may have on workers’ welfare.
Social justice.
Characteristics of the Labor Market
- Labor is a resource supplied by workers and demanded by firms in exchange for a wage.
- The wage rate is determined in the labor market.
- The suppliers of labor care about how the labor is used (wage rate, working conditions, promotion,
and more). - Labor is heterogeneous (skills, talents, etc. vary), unlike goods that cannot be standardized.
- Individual skill levels may improve over time due to human capital investment.
- There is a contractual relationship between employers and workers since labor is embodied in the
workers - Labor productivity is affected by pay and working conditions.
- Equity or fairness equity is considered necessary since the worker is not a product.
- There is the mobility of workers within and across such markets and within and across their
employers. - There are a variety of labor markets (occupations, locations, etc.)
Categories of the Labor Market
According to pay
Human capital
Sector
Geographical location
is the market for high-paying jobs characterized by good job roles, job security,
good working condition, and high opportunity for promotion and career development.
Primary labor market
The workforce
in this market includes doctors, engineers, economists, lawyers, among others.
Primary labor market
is the market for low-status jobs attributed by lower wage, poor working
conditions, job uncertainty, and slim opportunity for career advancement
Secondary labor market
According to human capital
Unskilled labor market, Semi-skilled labor market , Semi-skilled labor market , Professional labor market
is the place for jobs with no particular skills and qualifications. Workers are
expected to have no formal education or lower educational attainment.
Unskilled labor market
. Some examples of this market
encompass janitors, construction workers, helpers, maids, supermarket clerks, and fast food crews.
Unskilled labor market
is the market for jobs that require more skills and training than an unskilled
labor job. Workers usually have at least a high school diploma but not a college diploma.
Semi-skilled labor market
is the market where workers have specialized training or a learned skill-set to
perform the work.
Skilled labor market
People who perform skilled labor will most likely have a college degree. Several
examples of these types of jobs include law enforcement officers, financial technicians, nurses, sales
representative, real estate agents, and electricians, musicians,
Skilled labor market
covers individuals who exhibit an even higher degree of skills.
Professional labor market
According to sector
Agricultural labor market
Industrial labor market
Service labor market
involves those workers in the primary sector of the economy. The_________ of the economy that is concerned with the production of raw materials and includes
activities directly related to agriculture and the use of natural resources.
Agricultural labor market
covers all the workers in the secondary sector of the economy, including
manufacturing, fast-moving consumer goods, energy utilities, construction, heavy industries, and
other industrial economic activities
Industrial labor market
encompasses the workers of the tertiary sector of the economy, including
ttransportation, retail, distribution, retail, finance, information technology, tourism, education,
healthcare, etc.
Service labor market e
refers to the exchange of labor services between regions or cities within a
country.
National labor market
is the exchange of labor services from one country to another.
International labor market
Actors in the Labor Market
workers, firms, government
The actor of the labor market who supplies labor service for payoff.
workers
The actor in the labor market who demands for labor service.
Firm
The actor who implements policies and imposes rules and regulation to achieve
goals of public policy.
Governments.
as a simplified representation of
a real situation that is used to better understand real-life situations
model
a simplified framework of reality and representation of
economic phenomena. Economists use and build models to explain and understand the economic situation
and any related problems.
economic model
Very highly
skilled workers may fall under the category such as doctors, chief operating officers, professors,
engineers, and lawyers
Professional Labor market
Categories of Labor Market
According to
pay
human capital
sector
location
