Understanding the Role of Workers, Firms, and Government in Labour Economics - Prof. Ramos, Apuntes de Administración de Empresas

¡Descarga Understanding the Role of Workers, Firms, and Government in Labour Economics - Prof. Ramos y más Apuntes en PDF de Administración de Empresas solo en Docsity! INTRODUCTION ECONOMICS AND THE LABOUR MARKET 1 Why Labour Economics?  Individuals allocate substantial time and energy to labour markets.  Labour earnings is the main source of income for many households.  Labour economics studies how labour markets work.  Labour economics helps us understand individual’s behaviour and address many social and economic problems facing modern societies. 2 Some interesting features  Nearly every shock or change has a bearing on the labour market.  Family formation and dissolution, child raising.  Immigration  Welfare state policies  Technological change  To study the labour market we need a good combination of micro and macro foundations and quantitative methods (i.e. econometrics). 5 The Three Actors of the Labour Market Workers  The most important actor; without workers, there is no “labour”.  Desire to maximize utility (i.e., to optimize by selecting the best option from available choices).  Supplies more time and effort for higher payoffs, causing an upward sloping labour supply curve. 6 The Three Actors of the Labour Market Firms  Decide who to hire and fire.  Motivated to maximize profits.  Relationship between price of labour and the number of workers a firm is willing to hire generates the labour demand curve. 7 An example: The Alaskan Oil Pipeline  Oil discovered in Alaska in 1968  Build a 1,250 km long pipe to transport the oil to the southern port of Valdez.  The project employed 25,000 workers directly and another 25,000 indirectly.  Engineers but also low-skills workers, such as truck divers and excavators were employed.  How did the Alaskan Oil Pipeline affect the employment and wages in the Alaskan labour market? 10 An example: The Alaskan Oil Pipeline 11 Equilibrium 50,000 40,000 30,000 20,000 10,000 30,000 Labor Supply Curve Labor Demand Curves Earnings ($) Employment An example: The Alaskan Oil Pipeline Wages and Employment in the Alaskan Labor Market, 1968-1984 12