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LABOR ECONOMICS Ning Guangjie Tel: E-mail:seanning@ Chapter 1 INTRODUCTION 1.1 What does labor economics study? Labor economics studies how labor markets work. Such as labor force participation, the firm’s demand for the high-skill workers, wage determination, the human capital investment, the labor mobility, the labor market discrimination, trade Unions and unemployment. The theory helps us understand how the facts are generated, and where the facts can help shape our thinking about the way labor markets work. Model: simplify; The realism of assumption to the extent to which it helps us understand and predict how labor markets work. ? 1.3 The organization of the course? Chapter 2 Labor supply Chapter 3 Labor Demand Chapter 4 Labor Market Equilibrium Chapter 5 Human Capital Chapter 6 Contract and Work Incentive Chapter 7 Trade Union Chapter 8 Labor Mobility Chapter 9 Unemployment Appendix: An introduction to Regression Analysis Chapter 2 Labor SupplyWhether to work and how many hours to workLabor supply in short run, static labor supply decision, in long run 2.1 Some stylized facts about labor supply Measuring the labor force(LF): BLS CPS The employed(E, a worker must have been at a job with pay for at least 1 hours, or worked at least 15 hours on a non-paid job such as the family farm ), the unemployed(U, a worker must either be on a temporary layoff from a job, or have no job but be actively looking for work in the 4-week period prior to the reference week) , out of the labor force, the population(P) The huge increase in the labor force participation rate of women. A sizable decline in average hours of work per week prior to 1940. 2.2 The worker’s preferences and budget constraints Utility function: U=U(C, L) C, consumption of goods. L, consumption of leisure. U=C*L Indifference curve Marginal utility Marginal rate of substitution in consumption Time constraints: T=L+h L: leisure time; h: work
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