1. Next page Chapter 1: Labor Economics: Introduction and Overview

2. Jump to first page 1. Labor Economics as a Discipline

3. Jump to first page n Socioeconomic Issues u Gender and race discrimination u Legal and illegal immigration u Fall in unionization u Free trade n Quantitative Importance u 75% of national income goes to labor. n Unique Characteristics u Labor is rented and not bought/sold u Non-monetary aspects Importance of Labor Economics

4. Jump to first page u Institutional factors F Unions, licensing, minimum wage, discrimination u Labor demand is a derived demand Importance of Labor Economics

5. Jump to first page 2. The “Old” and the “New”

6. Jump to first page n Old Approach Change in Labor Economics u Highly descriptive and historical. u Little economic analysis n New Approach u Uses applied micro and macro theory

7. Jump to first page 3. Economic Perspective

8. Jump to first page n Labor economics uses theories of choice to explain behavior of labor market participants and resulting outcomes. n Theories rest on three assumptions u Relative scarcity u Purposeful behavior F Choices involve giving something up - an opportunity cost F Individuals make choices purposefully with an expected net gain Choice

9. Jump to first page u Adaptability F Workers and firms adapt to changes in expected costs and benefits Choice

10. Jump to first page 4. Overview

11. Jump to first page n Microeconomics u Individual economic units or markets n Macroeconomics u Economy as a whole Overview

12. Jump to first page 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 4.2 percent in 1999. (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.

13. Jump to first page End Chapter 1