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Dive into the intricate world of labour market economics with a focus on main actors, supply and demand dynamics, policy questions, and market characteristics. Explore the decisions made by individuals, firms, and governments, and analyze the positive and negative aspects of job-related scenarios. Understand how global competition, legislative environments, and changing workforce demographics impact the labour market. Delve into the dimensions of labour supply and demand and the interplay that determines wages, employment, and unemployment. Gain insights into various perspectives on labour market economics, from neoclassical to radical approaches.
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Introduction to Labour Market Economics Chapter One Created by: Erica Morrill, M.Ed Fanshawe College © 2002 McGraw-Hill Ryerson Ltd.
Chapter Focus • Main actors and roles • Labour supply and demand • Policy Questions • Characteristics of market • Neoclassical and alternative approaches © 2002 McGraw-Hill Ryerson Ltd.
Labour Market Participants • Individuals • Firms • Government © 2002 McGraw-Hill Ryerson Ltd.
Decisions by Individuals • When to enter the labour force • How much education/training • Type/extent of job search • Occupation/Industry • Labour hours/household work • Accept/quit/ relocation • Wage rate • Union/association © 2002 McGraw-Hill Ryerson Ltd.
Positive Aspects Obtaining a job Promotion Increase in wage rate Benefits Negative Aspects Unemployment Job displacement Discrimination Poverty Labour Market Behaviour © 2002 McGraw-Hill Ryerson Ltd.
Decisions by Employers • # of workers • Wages/benefits • Hours • Layoff /bankruptcy • Subcontract • Pension/retirement policy Global Competition Legislative Environment Changing Workforce © 2002 McGraw-Hill Ryerson Ltd.
Global Competition Influences • Free trade • Industrial restructuring • Deregulation • Privatization © 2002 McGraw-Hill Ryerson Ltd.
Changing Workforce • Age • Gender • Ethnic diversity © 2002 McGraw-Hill Ryerson Ltd.
Legislative Environment • Human Rights • Minimum wage • Overtime • Maternity leave • Worker’s compensation • Occupational health/safety • Pensions/mandatory retirement • Labour laws/collective bargaining © 2002 McGraw-Hill Ryerson Ltd.
Decisions by Government • individual rights vs. employer competitiveness • public support • Training • Insurance • Compensation • Pensions • Vocational rehabilitation © 2002 McGraw-Hill Ryerson Ltd.
Labour Market Economics Involves analyzing the determinants of the various dimensions of labour supply and demand and their interaction in alternative market structures to determine wages, employment and unemployment. © 2002 McGraw-Hill Ryerson Ltd.
Dimensions of Labour Supply Quantity Dimensions • Population growth • Labour force participation • Work hours • part-time • overtime • flex-time © 2002 McGraw-Hill Ryerson Ltd.
Dimensions of Labour Supply Quality Dimensions • Human capital investments • education, training, health • mobility • Work effort/intensity © 2002 McGraw-Hill Ryerson Ltd.
Dimensions of Labour Supply • Incentive effects of income maintenance and tax-transfer schemes • wage subsidies • income taxes • insurance • welfare • disability • pension plans © 2002 McGraw-Hill Ryerson Ltd.
Dimensions of Labour Demand The firm’s demand for labour are based on: • labour costs • firms output © 2002 McGraw-Hill Ryerson Ltd.
Supply and Demand The interaction between supply and demand determines • wages • employment • unemployment © 2002 McGraw-Hill Ryerson Ltd.
Table 1.1Sources of Income for Individual Canadians, 1994 © 2002 McGraw-Hill Ryerson Ltd.
Figure 1.1The Distribution of Individual Labour Earnings, 1994 © 2002 McGraw-Hill Ryerson Ltd.
Figure 1.2 The Distribution of Individual Annual Hours Worked, 1994 © 2002 McGraw-Hill Ryerson Ltd.
The Supply and Demand Model • Key assumptions in the neoclassical model: • behavioural assumptions • how buyers and sellers respond to prices and other factors • interaction of buyers and sellers and level and terms of market exchange © 2002 McGraw-Hill Ryerson Ltd.
Supply >Demand NS W’ W* ND ND’ N* NS’ Figure 1.4Wages and Employment in a Competitive Labour Market Wages Employment © 2002 McGraw-Hill Ryerson Ltd.
Current Policy Issues • Concerns for both public and private policymakers • Supply • Demand • Wage determination and wage structure • Unemployment © 2002 McGraw-Hill Ryerson Ltd.
Similarities/Differences Between Labour Market and Other Markets • Various actors/goals • three with different objectives or agendas • Sociological, institutional and legislative constraints • Market imperfections • imperfect/asymmetric information • costs • uncertainty and risk • Complex price serving a variety of functions • wage reflects a variety of factors © 2002 McGraw-Hill Ryerson Ltd.
Alternative Perspectives • Neoclassical • Institutionalism • Dualism • Radicalism © 2002 McGraw-Hill Ryerson Ltd.
End of Chapter One © 2002 McGraw-Hill Ryerson Ltd.
