Economics and Labour Issues and Concepts 1

 Work is a big part of our lives  Why are you at school?  What are they talking about when they talk about an economic crisis?  Can you recall a union job action?  Economics studies behaviour and markets  What would an individual do if circumstances change?  Why do we see what wee see?  Equilibrium.  Labour market is just one of the many markets 2

 (super short) Introduction to Economics  IES!  We have preconceptions  Economists are just a bunch with common preconceived ideas = Economics paradigm  Unlimited wants  Scarce resources  Choice is a consequence of scarcity  Opportunity cost is a consequence of scarcity  Opportunity cost = too important to miss  Homo economicus = (smart) maximizer 3

 Economic systems  Traditional economies  Command economies  Market economies  Mixed economies  Why mixed? 4

 Some (a little) more techy stuff  Decision makers  Individuals  Households  Firms  Individuals/households maximize utility  Scarcity => maximize surplus  Firms maximize profits  Profits = surplus  Why profits? “Corporations are people, my friend!” ® Mitt Romney  Marginal reasoning  Marginal cost  Marginal benefit  Marginal revenue 5

 Labour markets are complex  Market equilibrium (a distilled picture)  Demand  Supply  Equilibrium  Efficiency of equilibrium  Institutions  A firm as a black box  Transaction costs  Internal labour market  Long term contracts  Labour contracts <= limitations from the government  Labour contracts <= limitations from the (national) unions  Labour contracts <= limitations from the set of rules/laws  Social forces  Traditional economy, eh?  Changes in social norms  Women labour market participation: two stories  Gender/sex/race/ethnicity/age/citizenship/disability  Have you heard about the US corporations hiring veterans? 6

 Policies and morals  Positive statements vs  Normative statements  Policy considerations are a mix of positive and normative 7