econom labor

1. Introduction to Labor
Economics
Chapter 1

2. The study of labor economics requires a
solid foundation in microeconomics.
Review material may be found at:
http://www.oswego.edu/~kane/eco101.htm

3. Microeconomics background
 The study of labor economics requires a
solid foundation in microeconomics
 Review material may be found at
http://www.oswego.edu/~kane/eco101.htm

4. Labor market vs. other
markets
 labor services are rented, not sold,

5. Labor market vs. other
markets
 labor services are rented, not sold,
 labor productivity is affected by pay and
working conditions,

6. Labor market vs. other
markets
 labor services are rented, not sold,
 labor productivity is affected by pay and
working conditions, and
 the suppliers of labor care about the
way in which the labor is used.

7. Positive vs. Normative
Economics
 Positive economics - an attempt to
describe how the economy operates
using the scientific method.

8. Positive vs. Normative
Economics
 Positive economics - an attempt to
describe how the economy operates
using the scientific method.
 Normative economics - relies on value
judgments to evaluate the overall
functioning of the economy.

9. Positive economics
 abstraction

10. Positive economics
 abstraction
 ceteris paribus assumption

11. Positive economics
 abstraction
 ceteris paribus assumption
 test of model based on predictions, not
assumptions

12. Fundamental positive economic
concepts
 scarcity

13. Fundamental positive economic
concepts
 scarcity
 rational self-interest

14. Fundamental positive economic
concepts
 scarcity
 rational self-interest
 utility maximization

15. Fundamental positive economic
concepts
 scarcity
 rational self-interest
 utility maximization
 profit maximization

16. Normative economics
 interpersonal comparisons of utility are
impossible

17. Normative economics
 interpersonal comparisons of utility are
impossible
 Pareto improvement

18. Normative economics
 interpersonal comparisons of utility are
impossible
 Pareto improvement
 Pareto efficiency (aka Pareto optimality)

19. Normative economics
 interpersonal comparisons of utility are
impossible
 Pareto improvement
 Pareto efficiency (aka Pareto optimality)
 problems with the Pareto optimality
criterion

20. Markets and Pareto optimality
 under ideal conditions, markets result in
Pareto efficient outcomes

21. Types of Market failure
 imperfect information,

22. Types of Market failure
 imperfect information,
 transaction barriers,

23. Types of Market failure
 imperfect information,
 transaction barriers,
 price distortions,

24. Types of Market failure
 imperfect information,
 transaction barriers,
 price distortions,
 the nonexistence of markets when
externalities are present,

25. Types of Market failure
 imperfect information,
 transaction barriers,
 price distortions,
 the nonexistence of markets when
externalities are present,
 public goods,

26. Types of Market failure
 imperfect information,
 transaction barriers,
 price distortions,
 the nonexistence of markets when
externalities are present,
 public goods, and
 capital market imperfections.

27. Equity vs. Efficiency
 Attempts to make market outcomes
more equitable often results in the loss
of economic efficiency.