ECW2141ECG9170

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ECW2141/ECG9170 Labour Economics
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Subject Adviser
Dr Gennadi KAZAKEVITCH Berwick
- Room 129 Consultation time
Thursday 2-4 PM
Phone [phone] E-mail
Gennadi.Kazakevitch_at_buseco.monash.edu.au Interne
t http//www-personal.buseco.monash.edu.au/genn
adik/gkazwww.htm
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Lecture 1Subject InformationTopic 1 An
overview of the study of labour markets
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Subject Information

• Aims
• Assessment
• Assignments
• Examination
• Reading
• Structure

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AimsAt the conclusion of your study you will
have acquired an understanding of

• Special characteristics which distinguish labour
  markets from other types of markets.
• Factors which determine wage rates and working
  conditions for various types of employment.
• Mechanisms by which labour is allocated to
  various users in the economy.
• Implications of wage movements for the economy as
  a whole and for macroeconomic policy.

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Assessment
Assignment 30 Exam ( 3hours) 70 To
pass the subject you must complete all the
required work, and obtain an overall grade of at
lease 50 of the total marks, and obtain at least
a 50 grade for the examination.
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Assessment Criterion of the Assignment

• Has the question been addressed?
• Has the author demonstrated a clear understanding
  of the question and the major issues involved?
• Is there evidence of wide reading and willingness
  to research the question?
• Has the author shown an ability to assess the
  issues, to put forward a point of view and to
  support it with logical argument?
• Has the paper been constructed logically,
  structurally well organized, with a clear line of
  argument?
• Have the technical aspects of the paper -
  spelling, punctuation and also referencing been
  given proper attention?

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Reading

• Prescribed text
• Norris, K. The Economics of Australian Labour
  Markets, Pearson Education
• The Reader
• Media
• Literature search

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Reading

• Some other (older and very good) texts
• Hamermesh, D.S. and Rees, A. The Economics of
  Work and Pay, 4th edition, Harper and Row, New
  York, 1988. (Earlier editions are valuable also.)
• King, J.E. Labour Economics, An Australian
  Perspective, Australian edition, Macmillan, South
  Melbourne, 1990.
• McConnell, C.R. and Brue, S.L., Contemporary
  Labor Economics, 3rd. edition, McGraw Hill, New
  York, 1992.
• Sapsford, D. and Tzannatos, Z. The Economics of
  the Labour Market, Macmillan, Houndsmills, 1993.
• Whitfield, K. The Australian Labour Market,
  Harper and Row, Sydney, 1987.

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Reading

• Relevant classical Australian books
• Blandy, R. and Covick, O. (eds.), Understanding
  Labour Markets, Allen and Unwin, Sydney, 1984.
• King, J.E. (ed.), Readings in Australian Labour
  Economics, Macmillan, South Melbourne, 1992.
• Whitfield, K. (ed.), Contemporary Issues in
  Labour Economics, Harper and Row, Sydney, 1989.

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Structure
Labour Economics
Topic 9 Wage relativities and the personal
distribution of income
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Structure
Labour Economics
Topic 9 Wage relativities and the personal
distribution of income
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Aims
An overview of the study of labour markets

• On completion of this topic you will
• _ understand the factors which distinguish labour
  markets from other types of markets
• _ be aware of a number of different theoretical
  perspectives on the study of labour markets, in
  particular the neo-classical and institutionalist
  approaches and
• _ be aware of the main sources of information and
  statistical data used in studying labour markets.

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An overview of the study of labour markets
Non-separability of labour and the supplier of
labour
Labour market transactions are long term
transactions
Labour responds to incentives and disincentives
Work and income
Work and identity
Labour market change and tensions in labour
markets
Neo-classical economics
Theoretical perspectives
Post-Keynesian theory
Insitutionalism
Radical Marxism
Green Economics
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Reading

• Norris, Ch. 1.
• King, Ch. 1. (Reader)
• McConnell and Brue, Ch. 1

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An overview of the study of labour markets
Why are labour markets similar to other kinds of
markets?

• Labour services are traded, like other
  commodities, on the basis of price and
• The price for labour is determined by supply and
  demand.
• Labour services are traded, like other factors
  of production on the basis of productivity
  (return on factor).

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An overview of the study of labour markets
Non-separability of labour and the supplier of
labour

• The consumption of this commodity (factor)
  requires the development of a relationship with
  the supplier of the commodity.
• If an employer purchases labour it can only be
  done so by hiring the services of a supplier of
  labour.
• Supply of the product requires the continual
  presence of the supplier.

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An overview of the study of labour markets
Labour market transactions are long term
transactions

• Employment relationships often last for long
  periods of time.
• Both the actions and decisions of employers and
  employees may be affected by this time dimension.
  
• Highest wage
• Vs wage prospects
• Vs job security
• Vs pleasant work/human environment

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An overview of the study of labour markets
Labour responds to incentives and disincentives

• A piece of capital equipment, adequately
  maintained, usually functions all the time at the
  same level of technical efficiency
• Labour productivity is a function of a range of
  factors, one of which is motivation (both
  positive and negative).
• For an employer the amount of output which can
  be achieved is more than simply a function of the
  number of labour hours purchased.
• The reason for human resource management.

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An overview of the study of labour markets
Work and income

• The link between jobs and income causes labour-
  absorbing activity.
• This creates jobs that, on economic grounds
  should not exist.
• A reason for public sector employment.
• No of jobs does not correspond to the level of
  technology.
• Parkinsons law Work automatically expands so
  as to fill up the available time.

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An overview of the study of labour markets
Work and identity

• What are you?, or What do you do?
• Not only income is a motivation. Other aspects
  are
• Work is associated with status.
• Work is related to an idea of self worth and the
  respect of others. For example, in the negative
  sense, the stigma associated with being
  unemployed.
• Work may be a source of utility by itself. That
  is, some people like work, or find fulfilment in
  work.

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An overview of the study of labour markets
Labour market change and tensions in labour
markets

• Changes in labour market conditions
• Real economic growth increases in output per
  head of population.
• This means increases in labour productivity, or
  output per worker.
• This threatens to eliminate specific types of
  jobs or reallocation of labour.
• Reallocation of labour
• ?ovement of labour from agriculture to
  manufacturing industry,
• ?ore recently to service industries.

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An overview of the study of labour markets
Labour market change and tensions in labour
markets

• A modern problem
• technical change and rising labour productivity
  reduces employment opportunities in manufacturing
  and service industries
• it is not always clear where new jobs will be
  created.

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An overview of the study of labour markets
Labour market change and tensions in labour
markets

• Responses to this apparent dilemma have been
  various
• The market mechanism is seen as capable of
  redirecting resources to production of goods and
  services, perhaps as yet not even thought of by
  consumers.
• Specific planning for development of new
  industries to employ labour resources is needed .
• Ludditism, or the resistance to technical change
  in the interest of preserving jobs is advocated
  in some quarters.
• A reduction in the amount of labour required
  should be seen as a benefit rather than a
  problem.
• Such a society would need to find an alternative
  means of income distribution.
• The response should be to enrich leisure
  activities.

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An overview of the study of labour markets
Neo-classical economics

• Neoclassical approach emphasises the importance
  of economic factors of supply, demand and
  competition in markets.
• Lectures 2-4

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An overview of the study of labour markets
Post-Keynesian theory

• Individual behaviour is not paid attention at.
• Macro-economic factors a emphasised.
• Clearance of factors is not possible.
• Excess capacity is a normal situation.
• The role of governmental expenditure.

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An overview of the study of labour markets
Insitutionalism

• Based on the idea that the existence of rules and
  institutions within the labour market produces
  results which are at variance with neo-classical
  predictions.
• The differences are not just a matter of academic
  debate.
• In many areas different policy conclusions follow
  from the different explanations of how the market
  works.
• Lecture 6

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An overview of the study of labour markets
Radical Marxism

• The workers sell their labour force not the their
  service as labourers
• Wages at the cost of labour force.
• Oversupply of labour as the result of
  technological changes.
• Surplus product. Exploitation. Straggle of
  classes.

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An overview of the study of labour markets
Green Economics

• Work should be viewed positively by itself.
• Economic activity should be permanently
  sustainable.
• Resources are limited, thus growth is limited.
• Higher value on increased leisure time.

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An overview of the study of labour markets

• ABS DATA
• 6203.0 The Labour Force Australia
• 6304.0 Average Earnings
• 6302.0 Average Weekly Earnings
• 6312.0 Award Rates of Pay
• 6248.0 Employed Wage and Salary Earners
• 6354.0 Job Vacancies and Overtime
• 6235.0 Labour Force Status and Educational
  Attainment
• 6224.0 Labour Force Status of Families
• 6209.0 Labour Force Mobility
• 6220.0 Persons not in Labour force
• 6325.0 Trade Union Members
• 6310.0 Weekly Earnings of Employees
  (distribution)
• Yearbook Australia.

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An overview of the study of labour markets

• Australian Journals
• Labour and Industry
• Economic and Labour Relations Review
• Australian Bulletin of Labour
• Journal of Industrial Relations