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

The Regression LineLog Wage

Slope =

Change in log wage

Years of SchoolingChange in schooling

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

Campbell R. McConnell, Stanley L. Brue and David A. Macpherson, Contemporary Labor Economics

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

2. The “Old” and the “New”

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

3. Economic Perspective

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.

4. Overview

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.