Topic 2 Participation, population and hours of work

Question 1

What is labor force size determined?

Answer 1

Population and % of that population participating in the labor force

Question 2

What makes labor force vary

Answer 2

Migration, birthrate, % of the population and able to work. Decision who is active/inactive

Question 3

Explain Beckers Allocation of time

Answer 3

Household perspective, household is a decision making unit and that decision is interrelated, multiple uses of time

Question 4

What are Beckers multiple uses of time and what are they

Answer 4

1 Labor market time
2 Household production time
3 Consumption time
These are competitive and variable with each other (working more leads to less time to consumption)

Question 5

What are the types of commodities?

Answer 5

Time intensive commodities

Goods intensive commodities

Question 6

Explain time intensive commodities

Answer 6

Large time with small amount of goods (hill walks, sunset)

Question 7

Explain goods intensive commodities

Answer 7

Small amount of time with large amount of goods (meals at fast food restaurant)

Question 8

What happens when the labor market time becomes more valuable

Answer 8

Time intensive commodities are substituted to goods intensive ones, as people work more, how do they consume?

Question 9

What is the household choice?

Answer 9

Should allocate time to where they have comparative advantage (i.e. greater efficiency/productivity) Think female upbringing, discrimination + men higher salary

Question 10

Explain Becker Income Effect

Answer 10

High Wage=higher income leads to more household consumption - work hours down as consumption takes time

Question 11

Explain Becker Substitution effect

Answer 11

Higher wage=more hours worked
Household substitutes from time intensive to goods intensive in production (take away instead of home cooked meal.
Household substitutes in consumption from goods intensive to time intensive (fly to vacation instead of driving)

Question 12

What is labor participation rate

Answer 12

Compares actual force with the potential labor force (includes those unemployed looking for work)

Question 13

What are the actual trends and reasons for these?

Answer 13

Check notes!

Question 14

explain cyclical changes in participation

Answer 14

Added worker effect!

Question 15

Explain added worker effect

Answer 15

one family member loses their job, other one starts to seek for work to offset the loss of income & the nonlabor income for the rest of the family

Question 16

Explain discouraged worker effect

Answer 16

When the worker becomes discouraged after unsuccessful attempts to find work and stops seeking work.

Question 17

What happens to economy when discouraged worker exceeds added-worker effect?

Answer 17

Labor force shrinks in recession

Question 18

What is the assumption of the trends?

Answer 18

Rising wages lead to income effect (untrue), hours of participation have remained stable, higher education result in job commitment? Check doc. 2 bottom