2003 Econ 301 Labour Economics:

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2003 Econ 301 Labour Economics

• Text
• Modern Labour Economics
• Ehrenberg and Smith, 7th Ed
• Lecturers
• Stuart McDougall 729
• Arlene Garces-Ozanne 701a
• Assessment
• 20 test week 10
• 10 fortnightly multichoice quizzes
• 10 tutorial assignments

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What is this course about? ES, Ch 1, pp. 1-14

• the application of economic analysis to the
  behaviour of, and relationship between employers
  and employees.
• the important role economists play from a policy
  analysis and policy advice perspective.
• helping you to learn how the basic concepts in
  labour economics can help you appreciate and
  understand the important social implications of
  various labour market interventions.
• Some important NZ statistics
• Compensation of Employees 51.3b
• Net National Disposable Income 99.5b
• Gross Domestic Product 122.2b
• So employment is a pretty fundamental
  relationship in our lives.

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• As a result it attracts much attention from
• media commentators
• legislators
• disgruntled employees and employers
• Labour is unique! B/c
• Labour services are rented not bought and sold.
• Labour services cannot be separated from the
  workers themselves.
• There are important nonpecuniary factors such as
• the work environment
• risk of injury
• personalities of managers fair treatment
• flexibility of work hours
• Hence there are important differences between
  employment transactions and commodity markets.
• Nevertheless the employment transaction clearly
  represents a mkt.

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• Why? B/c
• Institutions have been developed between buyers
  and sellers of labour services
• Once contacts made information about price and
  quality is exchanged
• Upon agreement a contract (either formal or
  informal) is executed
• Often, but not always, compensation is based on
  time not output
• These labour mkt transactions
• Serve the needs of individuals and
• The needs of society at large
• So through the labour mkt the nations most
  important national resource is allocated to
  firms, industries, occupations and regions.

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Some basic concepts

• Labour economics is concerned with the behaviour
  of employers and employees in response to
  incentives and an analysis of the impact of govt
  intervention.
• Primarily from a positive analytical perspective
  ie. that people respond to incentives, are
  confronted by scarcity, are rational.
• Distributional considerations about what is
  fair is the realm of normative economics and is
  the justification for govt intervention of one
  form or another.
• Mutually beneficial transactions may fail in the
  lab. mkt. b/c of
• ignorance transaction barriers price
  distortions non-existence of a mkt
• Solution govt intervention and b/c of
  informational failures or restricions on choice
• public-good characteristics of the work
  environmentcapital mkt imperfections
  establishing mkt substitutesefficiency vs equity
  considerations.

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• What are the important aggregates Mar 03
• Population 4.000m
• Those 15yrs and over 3.013m
• Those employed 1.895m
• Those unemployed 0.099m
• Those not in the labour force 1.017m
• LFPR and the UE rate 66.2 and 5.0

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Figure 2.1 Labour Force Status of the U.S. Adult
Population, 1994
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US Unemployment Rates for the Civilian Labor
Force, 1900-1994
Figure 2.2
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2003
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Next 2 lectures

• Wednesday 16th 12 noon to 1 pm.
• Then Thursday 17th 1 pm to 2 pm. MC test during
  the first 20 minutes of the class.
• Tutorials will be held fortnightly on Thursdays
  beginning week 2. 1st tutorial will be on
  Thursday 24th July.
• Preparation read all of ES Chs 1 2 pp. 1-61.