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Introduction slide 2
Jumlah Pertemuan sebanyak 18 kali
Kehadiran mahasiswa kurang dari 75% tidak dibenarkan mengikuti Ujian Akkhir Semester
Penilaian didasarkan kepada acuan Normal yang terdiri dari:
Kuis, Paper, Presentasi dan PR = 40%
Midterm test = 30%
Ujian Final = 30%.
Introduction slide 3
Bahan Bacaan:
1. Ronald G.Ehrenberg and Robert S. Smith, Modern Labor Economics, Theory and Public Policy, 6th Edition, Addison-Wesley, 1997
2.Bruce E. Koufman and Julie L. Hotchkiss, The Economics of Labor Markets, Thomson and South-Western, 2006
3. George J. Borjas, Labor Economics, Third editon, McGraw- Hill, 2005
4. Campbell R. McConnell, Stanley L. Brue and David A. Macpherson, Contemporary Labor Economics, McGraw- Hill International Editions, 1999 5. Mulyadi S., Eknomi Sumber Daya Manusia Dalam Perpektif
Pembangunan, PT RajaGrafindo Persada, Jakarta, 2003
6. http://www.oswego.edu/~kane/eco350.htm
Topic 4Labor Market Equilibrium
Topic 4Labor Market Equilibrium
Labour Economics
Labour Economics
Topic 5Education, training and human capital investment
Topic 5Education, training and human capital investment
Topic 6Labor Mobility
Topic 6Labor Mobility
Topic 3 .Labour supply
Topic 3 .Labour supply
Topic 2Demand for Labor
Topic 2Demand for Labor
Topic 1An overview of the study of labour markets
Topic 1An overview of the study of labour markets
Topic 7Wage Differentials
Topic 7Wage Differentials
Topic 11. ReviewTopic 11. Review
Topic 8. Labor UnionTopic 8. Labor Union
Topic 9. Labor Productivity
Topic 9. Labor Productivity
Topic 10. Employment and Unemployment
Topic 10. Employment and Unemployment
Chapter 1Borjas
Introduction to Labor Economics
Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinLabor Economics, 4th edition
Why study Labor Economics?• Human resources allocate substantial time and
energy to labor markets
• Labor economics studies how labor markets work
• Labor economics helps us understand and address many social and economic problems facing modern societies
Basics of the Labor Market
• Participants are assigned motives:
– Workers look for the best job
– Firms look for profits
– Government uses regulation to achieve goals of public policy
• Minimum wages• Occupational safety
Three “Actors”• Workers
– The most important actor; without workers, there is no “labor”
– Desire to optimize (to select the best option from available choices) to maximize well-being
– Will want to supply more time and effort for higher payoffs, causing an upward sloping labor supply curve
Three “Actors”
• Firms
– Decide who to hire and fire
– Motivated to maximize profits
– Relationship between price of labor and the number of workers a firm is willing to hire generates the labor demand curve
Three “Actors”
• Government
– Imposes taxes, regulations
– Provides ground rules that guide exchanges made in labor markets
Summary: the Three “Actors”
T h re e A c to rs in th e L a bo r M a rke t
W o rke rsS u p p ly lab o r fo r pa yo ff
F irm sD e m a n d la b or g ive n p rice o f la b or
a n d d e sire fo r p ro fits
G o ve rn m e ntT a xes
R e g u la tio nsR u les o f e xch an ge
L a b or M arke t
Why Do We Need a Theory?
• Explain and understand how labor markets work
• Focus on the essential variables while leaving out other, less crucial, factors
• Create a model that helps explain the theory
Positive vs. Normative Economics
• Positive economics– Addresses the facts– Focus on “what is”– Questions answered with the tools of economists
• Normative economics– Addresses values– Focus on “what should be”– Requires judgments
Supply and Demand in the Engineering Market
Equilibrium
50,000
40,000
30,000
20,00010,000 30,000
Labor Supply Curve
Labor DemandCurve
Earnings ($)
The Alaskan Labor Market and Construction of the Oil Pipeline
D0
D1
S0
Earnings ($)
Employment
w1
w0
E1E0
Wages and Employment in the Alaskan Labor Market, 1968-1983
50,000
70,000
90,000
110,000
130,000
150,000
170,000
190,000
210,000
230,000
250,000
1968 1970 1972 1974 1976 1978 1980 1982 1984
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Employment Monthly Salary ($)
Employment
Wage
Scatter Diagram: Wages and Schooling by Occupation, 2001
2
2.5
3
3.5
4
8 10 12 14 16 18 20
Years of schooling
Lo
g w
ag
e
Choosing Among Lines Summarizing Trends in the Data
2
2.5
3
3.5
4
8 10 12 14 16 18 20
Years of schooling
Lo
g w
age
A
B
C
The Scatter Diagram and the Regression Line
2
2.5
3
3.5
4
8 10 12 14 16 18 20
Years of schooling
Lo
g w
age
What is Labor Economics?
• Labour economics seeks to understand the functioning of the market and dynamics for labour.
• Labour markets function through the interaction of workers and employers.
• Labour economics looks at the suppliers of labour services (workers), the demanders of labour services (employers), and attempts to understand the resulting pattern of wages, employment, and income.
• It is an important subject because unemployment is a problem that affects the public most directly and severely.
• Full employment (or reduced unemployment) is a goal of many modern governments.
• There are two sides to labor economics. Labor economics can generally be seen as the application of microeconomic or macroeconomic techniques to the labor market.
• Microeconomic techniques study the role of individuals and individual firms in the labor market.
• Macroeconomic techniques look at the interrelations between the labor market, the goods market, the money market, and the foreign trade market. It looks at how these interactions influence macro variables such as employment levels, participation rates, aggregate income and Gross Domestic Product.
Importance of Labor Economics
• Socioeconomic Issues– Gender and race discrimination– Legal and illegal immigration– Fall in unionization– Free trade
• Quantitative Importance – 75% of national income goes to
labor.
Importance of Labor Economics
• Unique Characteristics– Labor is rented and not
bought/sold– Non-monetary aspects– Institutional factors
• Unions, licensing, minimum wage, discrimination
– Labor demand is a derived demand
Change in Labor Economics
• Old Approach– Highly descriptive and historical– Little economic analysis– The complexities of labor markets seemed to
make more or less immune to economic analysis.
• New Approach– Uses applied micro and macro theory
Choice
• Labor economics uses theories of choice to explain behavior of labor market participants and resulting outcomes.
• Theories rest on three assumptions…
Choice
1. Relative scarcity- Society must choose how and for what purpose labor and other resources (land, capital, entrepreneur) should be allocated since this resources are scarce.
- Example of choices:- I. How much time to devote to jobs, to work in the home, and to leisure. II. How much present income to forgo for the prospects of obtaining higher future earnings. III. Which g&s to buy and which to forgo.
-Relative scarcity of time, personal income. And societal resources is basic element of economics perspective.
2. Purposeful behavior• Choices involve giving something up -an opportunity
cost.• Examples: forgone leisure, forgone private sector
output.• Individuals make choices purposefully with an
expected net gain.• Examples: a worker will compare the extra utility
(income) gained from an added hour of work with the values of the lost leisure.
• A firm will compare the added revenue from hiring a worker with the extra wage cost.
• It not easy to achieve intended goals due to imperfect information.
3. Adaptability• Workers and firms adapt to changes in expected costs
and benefits.• Examples: some workers will adjust the number of
hours they desire to work when the wage rate they receive changes.
• Fewer people will decide to obtain a specific skills when the training cost rises or when the wage paid to those already possessing the skills falls.
• Firms will adjust their hiring when the demand for their product changes.
• Union officials will lower their wage demands when the economy encounters recessions and unemployment among union workers is high.
o Economic perspectives assumes that workers, employers and other labor market participants adapt, adjust, or alter their behaviors in responses to changes in expected costs and expected gains.
Overview
• Microeconomics– Individual economic units or markets
• Macroeconomics– Economy as a whole
1. Why must the concepts of supply and demand as they pertain to products be modified when applied to labor markets?
Questions for Thought
2. Indicate whether each of the following statements pertains to microeconomics or macroeconomics:
(a) The unemployment rate in the United States was 4.6 percent in 2006.
(b) Bartenders at Andrew’s Capital Bar and Grill earn $9.25 per hour.
(c) The productivity of American workers as a whole has increased by more than 2 percent per year in the last 4 years.
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