Ethics and, in, and for Labor Markets

Question 1

Labor markets involve human workers, which introduces unique characteristics and ethical concerns:

Answer 1

1. Endogenous effects on workers: jobs shape workers intellectual and physical abilities: repetitive and monotonous work can reduce creativity or critical thinking in workers
2. Incomplete labor contracts: you can’t fully describe or enforce the quality and effort of labor in a contract
3. Asymmetric power: employers have more power (they can use higher wages to motivate workers, threat of unemployment), this creates conflicts: workers want fair wages/conditions and employers want to minimize costs and maximize effort.

Question 2

What does Robert Lucas say about unemployment

Answer 2

can be voluntary and involuntary, depends on the quality of available job opportunities

Question 3

counterarguments to voluntary view (3)

Answer 3

1. efficiency wages: employers often pay higher-than-market wages to reward productivity, this leads to unemployment for workers willing to work at lower wages but not being hired.
2. Keynesian perspective: unemployment is causes by low demand in the economy, lower wages reduces consumer spending, worsening unemployment
3. skills mismatch: employers avoid hiring unemployed workers because they lack necessary skills and high training or transaction costs are involved

Question 4

UNEMPLOYMENT: moral debate

Answer 4

conservative view: it is voluntary, you don’t work hard enough

liberal economists: often involuntary as people are jobless due to circumstances beyond their control

Question 5

philosophical view on volutary choice

Answer 5

choices are only voluntary if people have legitimate alternatives

Question 6

Alan wertheimers view on choices

Answer 6

choices are voluntary if:
1. acceptable alternatives exist
2. no one’s rights are violated

Question 7

what is the problem with traditional measures of unemployment: fail to account for certain groups

Answer 7

1. incarcerated people: people in prison are not included
2. discourages workers: individuals who stop looking for work bc they think NO JOBS ARE AVAILABLE are excluded
3. part-time or underemployed workers: people working parttime but seeking for fulltime, are classified as unemployed

Question 8

features of the gig economy

Answer 8

1. Lack of traditional benefits: gig workers dont receive employment insurance, paid leave, minimum wages (only traditional employees get this)
2. Flexibility: freedom to choose when, how much and which jobs they take

Question 9

Advantage gig economy

Answer 9

Flexibility: freedom to choose when, how much and which jobs they take

Question 10

Disadvantage gig economy

Answer 10

Lack of traditional benefits: gig workers dont receive employment insurance, paid leave, minimum wages (only traditional employees get this)

Question 11

key features of Ubers model

Answer 11

1. standardized transactions: über connects drivers with passengers and handles tasks like setting fares; saves time, reduces costs, etc.
2. flexibility for drivers: drivers can choose when and how much they work, but do not receive employee benefits.
3. impact on labor relations: uber treats them as contracters, thus this means that do not get the associated benefits.

Question 12

challenges and issues with the gig economy

Answer 12

1. labor rules and worker classification: gig platforms classify workers as contractors
2. minimum wage concerns: may earn less than minimum wage
3. broader drawbacks of Ubers model: increased traffic and pollution

Question 13

solution to the problem with contractors

Answer 13

independent workers: workers who would have the same labor rights, but no guaranteed minimum income

Question 14

wider economic implications of the gig economy

Answer 14

1. market distortion: workers might compete against one another and accept a lower pay
2. inequality concerns: may worsen inequality by reducing job security and benefits for workers
3. reduced negotiation power: making them vulnerable to exploitation