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Market for Labor

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Title: Market for Labor


1
Market for Labor
2
Labor Market Topics
  • Immigration
  • Population growth
  • Others
  • Effect on Labor Markets

3
Immigration before 1860.
  • Immigration was unrestricted until after Civil
    War.
  • unrestricted meant anyone could come from
    anyplace and become a US citizen.
  • Open Door Policy.
  • No restrictions based on education, parentage,
    criminal record, etc.
  • There was no support for the idea of restricting
    immigration.
  • Before 1830, immigration was a minor source of
    population increase.
  • Most of increase in population was due to balance
    of births over deaths.
  • After 1830, immigration increased and built up
    steadily.
  • In 1845, series of poor harvests and the
    failure of the potato harvest in northern Europe
    produced the first deluge of immigrants-Irish
    Immigration.

4
Major Features of First Wave of Immigration
  • First Wave of immigrants from Northern Europe.
    (Example of push phenomena)
  • First upsurge came from the British Isles as a
    result of the potato famine-economics of a potato
    economy.
  • Potato a wonder vegetable.
  • Potato allows the greatest level of population
    density.
  • When the potato crop failed, suddenly, the land
    could not support the existing population.
  • More than 1 million died in late 1840s in
    Ireland-life expectancy at birth dropped to
    around 21.
  • In Ireland, 1/3rd of the population emigrated or
    dropped dead in a short period in the 1840s.
  • By 1914 the population in Ireland was 1/2 of what
    it was before the potato famine.
  • 1846-55, 1.3 mil. Irish immigrated to US.
  • Germany produced another 1 mil. immigrants.
    Mainly the result of political upheavals.

5
Immigration, 1845-60 by origin, ( 1000's of
persons)
6
Proportional Immigration, 1845-60
7
Explanation of Immigration
  • Insight into the size and timing of immigration
    flows into the U.S. can be understood with a
    push-pull theory.
  • Adverse conditions in various parts of the world
    push people out of their native countries.
  • War-Nicaragua, Cuba, Guatemala and Vietnam.
  • Famine-Irish.
  • Political turmoil and religious persecution-Iran,
    religious or ethnic minorities--Jews
  • General Poverty-India, Central Africa
  • Favorable conditions in the U.S. pull people from
    poorer areas of the world.
  • Actors, artists, and athletes-Jackie Chan and
    baseball players.
  • Better market conditions for women-Japan and
    Korea.
  • Business Cycle in the U.S.-HB1 Visas
  • Most of the immigrants went to the northern
    states.
  • 3.6 mil. immigrants in NE and E-Central, 391,000
    in South, 144,000 in West (Chinese).

8
Second Wave of Immigration
  • 2nd major wave of immigrants came began around
    1900.
  • 2nd wave of immigrants originated in southern and
    central Europe.
  • First wave of immigrants from England and
    Northern Europe were protestant and were much
    like the existing inhabitants and therefore
    provoked little resistance from population.
  • Beginning with the Irish and Germans in 1840s
    and 50s and accelerating in the 1900s with the
    immigrants from southern and central Europe,
    immigrants began to be viewed as really
    different.
  • Rise of anti-immigration sentiment and
    legislation.
  • Chinese example.
  • Immigration produced a continuing rise in the
    population in urban areas.
  • The country continued spreading out
    geographically but immigrants were concentrated
    in large urban areas.

9
Annual Combined Immigration from European Areas
  • Starting in the late 19th and early 20th century,
    the source of immigration shifted from Northern
    to Southern Europe.
  • Difference in religion caused ethnic tension.
  • Catholic vs. Protestant. Wave of unwashed
    newcomers, with strange accents, worshipping
    strange religion.
  • Rise of anti-immigrant societies-proposed 21 year
    residence requirement.
  • Same anti-immigrant feeling arose in the late
    18th cent. when immigrants were Italians. Greeks,
    and southern slavs.
  • 1921 saw the first law to generally restrict
    immigration

10
Immigrant Origins by Percentage of Total
From 1821 to 1890, the majority of immigrants
came from Northern and Western Europe. From 1891
to 1920, the source of immigrants had shifted to
East, Central, and Southern Europe.
11
Native White Population of Foreign or Mixed
Parentage by Country of Origin, 1930
The first and second big waves of immigrants came
mostly across the Atlantic
12
Immigrants per 1000 population, 1820-1951
Although immigration was important in driving the
growth of population, even during the peak years,
immigrants never composed a significant portion
of total U.S. population. This was not true in
urban areas where immigrants concentrated.
13
U.S. Immigration, 1865-1914
Push Pull explanations of immigration?
14
Economics of Immigration
  • Can understand immigration by understanding a few
    simple economic principles.
  • Effect of immigration will be to lower the
    price/cost of goods in which immigrants have a
    comparative advantage.
  • In most historical episodes, this in the
    production of goods with high unskilled/manual
    labor.
  • Immigrant tend to cluster in certain industries
  • Irish in manual labor/construction, Japanese in
    gardening and landscaping, Chinese in
    railroads/restaurants, Cambodians in donut shops,
    Korean's in convenience stores etc.
  • Comparative Advantage and or information
  • Immigration and the redistribution of income.
  • Effect of immigration will be to lower the
    cost/price of labor intensive goods--benefiting
    all society generally.
  • Labor which competes against immigrants will be
    hurt (permanently) by being driven to other
    occupations.

15
The Politics of Immigration.
  • Anti-immigrant feelings concentrated in groups
    with similar comparative advantage as immigrants.
  • Politics of anti-immigration laws and special
    interest laws
  • Benefits of immigration are large but widely
    dispersed.
  • Everybody receives a small benefit.
  • Costs of immigration are small but narrowly
    concentrated.
  • Immigrants, one of the prime beneficiaries of
    immigration, do not vote.
  • Anti-immigration legislation is usually the
    result of a small group of highly motivated
    people.
  • Special interest politics.

16
US Population
17
Trends in the Birth Rate
  • Since 1800, the rate of fertility declined
    steadily.
  • Decline in fertility due to a decline in the
    number of large families.
  • Interesting statistics.
  • 7 children times 3/4 year5.25 years pregnant.
  • given 2 year intervals between children, the
    average women spent her whole adult life in
    childbearing- 39 year life expectancy, 14 yrs
    pregnant.
  • Large decrease in births occurred in the absence
    of modern birth control and in a male dominated
    society.

18
What factors brought about so persistent a
decline in large families and a drop in the crude
birth rate?
  • Grab bag of explanations not completely sorted
    out.
  • Children as an inferior good.
  • Families and women choose fewer children and more
    all other goods as income rises.
  • Alternative forms of entertainment at higher
    levels of income.
  • Quality vs. Quantity.
  • As the decades passed, parents began to choose
    higher quality rather that higher quantity
  • Children and automobiles.
  • Typical parents wanted to spend more on their
    first child (or children) rather than having more
    children.
  • Prior to Civil War, typical child had no shoes,
  • Clothing, housing etc. were equally scanty.
  • Few children went beyond a few months of
    schooling a year.
  • Risk aversion argument.
  • Every increase in life expectancy meant that
    children would live longer.
  • In 1800, parents could expect a baby to live 39
    years.
  • By 1900, life expectancy at birth of 47 years
  • By 1979, life expectancy had increased to 74
    years.
  • Hence, one birth in 1977 could provide parents
    with almost as many years of cheer (in their
    older years) as two births in 1777.

19
Explaining the Decline in the Birth Rate.
  • The value of children as producer goods steadily
    declined.
  • On family farms, children were valued for
    themselves and as a vital source of labor.
  • As population density increased the rate of
    population decreased.
  • When the supply of land is limited, the value of
    children as earning assets is low, hence the
    demand for children may not be as great a where
    there is plenty of open land nearby.
  • Inheritance motive
  • If parents desire to leave a farm of certain
    size, may reduce number of children as population
    density increases.

20
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21
Explaining the drop in mortality
22
Possible Explanations.
  • Cause of decline remains a puzzle.
  • Potential explanations
  • Improvements in medical technology not the cause
    of the decrease because the fall in the death
    rate occurred before the advent of modern medical
    technology.
  • reduction in the virulence of pathogens.
  • human acquisition of immunity through natural
    selection.
  • Improvements in
  • personal hygiene
  • public sanitation

23
  • Both birth and death rate decline and population
    growth slows
  • Population becomes more urbanized

24
Changes in employment patterns
ectoral Distribution of the Labor Force, 1800-1999

    Share in Share in Share in Share in Share in Share in
        Non-Agriculture Non-Agriculture Non-Agriculture Non-Agriculture
Year Total Labor Force (1000s) Agriculture Agriculture Total Manufacturing Manufacturing Services
1800 1,658 76.2 76.2 23.8      
1850 8,199 53.6 53.6 46.4      
1900 29,031 37.5 37.5 59.4 35.8 35.8 23.6
1950 57,860 11.9 11.9 88.1 41.0 41.0 47.1
1999 133,489 2.3 2.3 97.7 24.7 24.7 73.0
25
Labor markets
  • Were labor markets integrated?
  • How do we tell?
  • Table shows annual rate of nominal wages
    1820-1856

NEast Midwest S Atlantic S Central
Artesian .8 .8 .5 .4
Clerk 1.5 1.9 .9 1.6
Labor 1.1 1.1 .1 1.7
26
  • If markets are integrated labor should be paid
    the same.
  • Difficult to get data before the Civil War
  • Margo uses data from army quartermasters.

27
Relative Regional Real Wage Rates in the United
States, 1825-1984 (Northeast100)
28
  • Shows convergence of North central and North
    East.
  • Wages North central region start out 30 higher,
    close to 100 in 1900.
  • Much slower convergence between South and North
    East
  • Not much migration until WWI

29
Unionization
Industry 1880 1910 1930
Agriculture Forestry Fishing 0.0 0.1 0.4
Mining 11.2 37.7 19.8
Construction 2.8 25.2 29.8
Manufacturing 3.4 10.3 7.3
Transportation Communication Utilities 3.7 20.0 18.3
Private Services 0.1 3.3 1.8
Public Employment 0.3 4.0 9.6
       
All Private 1.7 8.7 7.0
All 1.7 8.5 7.1
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