1. CHAPTER 1: INTRODUCTION TO LABOR ECONOMICS

2. OVERVIEW
Economics
How the society use SCARCE RESOURCES to fulfill UNLIMITED WANTS
Scarce resources: Land, LABOR, capital, entrepreneur
Labor economics
Examine how the market functions; and what are the outcomes of the labor markets
Market functioning might be based on:
Labor cost – wage rate
Non-monetary aspects such as working environment, career development, medical benefit, etc.
Outcomes of the labor markets:
Entry of foreign workers
Unemployment
Minimum wage

3. WHY STUDY LABOR ECONOMICS?
To address socioeconomic issues
Understand the causes of socioeconomic issues such as
why female workers are greater than male workers?
race discrimination
Free trade – flow of labors – legal and illegal immigration
Labor as dominant resource
Work – get income – contribute to national income of a country
Income – spend – profits for firms – national income.
Unique features of labor
Labor demand
derived demand / indirect demand
demand for labor depends on the demand for goods and services that the labor produces.
Labor supply
labor is rented (by receiving wages and salaries), not bought or sold.
Interested in non-monetary benefits such as annual leave, sick leave, medical benefits, etc.

4. ASSUMPTIONS UNDERLYING ECONOMIC PERSPECTIVE
Relative scarcity / limited
Time (work / leisure)
Income (spend / save)
Societal resources (land, labor, capital, entrepreneur)
Purposeful behavior – Choose the best alternative
Opportunity cost – what you sacrifice
Adaptability
Labor market respond to changes based on costs and benefits.

5. MICROECONOMICS vs MACROECONOMICS
Decisions made by individual economic units (individual, firm)
Demand and supply of labor
Work-leisure decision
Labor participation rate
Macroeconomics
Decisions made by the economy as a whole.
Employment and unemployment
Labor productivity
Aggregate income, GDP