微觀經(jīng)濟(jì)理論英文版課件：ch16 LABOR MARKETS

1、Chapter 16LABOR MARKETSCopyright 2005 by South-Western, a division of Thomson Learning. All rights reserved.1Allocation of TimeIndividuals must decide how to allocate the fixed amount of time they haveWe will initially assume that there are only two uses of an individuals timeengaging in market work

2、 at a real wage rate of wleisure (nonwork)2Allocation of TimeAssume that an individuals utility depends on consumption (c) and hours of leisure (h)utility = U(c,h)In seeking to maximize utility, the individual is bound by two constraintsl + h = 24c = wl3Allocation of TimeCombining the two constraint

3、s, we getc = w(24 h)c + wh = 24wAn individual has a “full income” of 24wmay spend the full income either by working (for real income and consumption) or by not working (enjoying leisure)The opportunity cost of leisure is w4Utility MaximizationThe individuals problem is to maximize utility subject to

4、 the full income constraintSetting up the LagrangianL = U(c,h) + (24w c wh)The first-order conditions areL/c = U/c - = 0L/h = U/h - = 05Utility MaximizationDividing the two, we getTo maximize utility, the individual should choose to work that number of hours for which the MRS (of h for c) is equal t

5、o wto be a true maximum, the MRS (of h for c) must be diminishing6Income andSubstitution EffectsBoth a substitution effect and an income effect occur when w changeswhen w rises, the price of leisure becomes higher and the individual will choose less leisurebecause leisure is a normal good, an increa

6、se in w leads to an increase in leisureThe income and substitution effects move in opposite directions7Income andSubstitution EffectsU1U2LeisureConsumptionABCThe substitution effect is the movementfrom point A to point CThe individual chooses less leisure as a result of the increase in wThe income e

7、ffect is the movementfrom point C to point Bsubstitution effect income effect8Income andSubstitution EffectsU1U2LeisureConsumptionABCThe substitution effect is the movementfrom point A to point CThe individual chooses more leisure as a result of the increase in wThe income effect is the movementfrom

8、 point C to point Bsubstitution effect income effect9A Mathematical Analysisof Labor SupplyWe will start by amending the budget constraint to allow for the possibility of nonlabor incomec = wl + nMaximization of utility subject to this constraint yields identical resultsas long as n is unaffected by

9、 the labor-leisure choice10A Mathematical Analysisof Labor SupplyThe only effect of introducing nonlabor income is that the budget constraint shifts out (or in) in a parallel fashionWe can now write the individuals labor supply function as l(w,n)hours worked will depend on both the wage and the amou

10、nt of nonlabor incomesince leisure is a normal good, l/n 0, l/w 0the individual will always choose to spend n on leisureSince leisure costs w per hour, an increase in w means that less leisure can be bought with n22Cobb-Douglas Labor SupplyNote that l/n 0an increase in nonlabor income allows this pe

11、rson to buy more leisureincome transfer programs are likely to reduce labor supplylump-sum taxes will increase labor supply23CES Labor SupplySuppose that the utility function isBudget share equations are given bywhere = /(-1)24CES Labor SupplySolving for leisure gives and25Market Supply Curve for La

12、borlllwwwsAsBTo derive the market supply curve for labor, we sumthe quantities of labor offered at every wageIndividual Assupply curveIndividual Bssupply curveTotal laborsupply curveSlA*lB*w*l*lA* + lB* = l*26Market Supply Curve for LaborlllwwwsAsBNote that at w0, individual B would choose to remain

13、 out of the labor forceIndividual Assupply curveIndividual Bssupply curveTotal laborsupply curveSw0As w rises, l rises for two reasons: increased hours of work and increased labor force participation27Labor Market EquilibriumEquilibrium in the labor market is established through the interactions of

14、individuals labor supply decisions with firms decisions about how much labor to hire28Labor Market Equilibriumreal wagequantity of laborSDw*l*At w*, the quantity of labor demanded is equal to the quantity of labor suppliedAt any wage above w*, the quantity of labor demanded will be less than the qua

15、ntity of labor suppliedAt any wage below w*, the quantity of labor demanded will be greater than the quantity of labor supplied29Mandated BenefitsA number of new laws have mandated that employers provide special benefits to their workershealth insurancepaid time offminimum severance packagesThe effe

16、cts of these mandates depend on how much the employee values the benefit30Mandated BenefitsSuppose that, prior to the mandate, the supply and demand for labor arelS = a + bwlD = c dwSetting lS = lD yields an equilibrium wage ofw* = (c a)/(b + d)31Mandated BenefitsSuppose that the government mandates

17、 that all firms provide a benefit to their workers that costs t per unit of labor hiredunit labor costs become w + tSuppose also that the benefit has a value of k per unit suppliedthe net return from employment rises to w + k32Mandated BenefitsEquilibrium in the labor market then requires thata + b(

18、w + k) = c d(w + t)This means that the net wage is33Mandated BenefitsIf workers derive no value from the mandated benefits (k = 0), the mandate is just like a tax on employmentsimilar results will occur as long as k t, the new wage falls by more than the cost of the benefit and the equilibrium level

19、 of employment rises35Wage VariationIt is impossible to explain the variation in wages across workers with the tools developed so farwe must consider the heterogeneity that exists across workers and the types of jobs they take36Wage VariationHuman Capitaldifferences in human capital translate into d

20、ifferences in worker productivitiesworkers with greater productivities would be expected to earn higher wageswhile the investment in human capital is similar to that in physical capital, there are two differencesinvestments are sunk costsopportunity costs are related to past investments37Wage Variat

21、ionCompensating Differentialsindividuals prefer some jobs to othersdesirable job characteristics may make a person willing to take a job that pays less than othersjobs that are unpleasant or dangerous will require higher wages to attract workersthese differences in wages are termed compensating diff

22、erentials38Monopsony in theLabor MarketIn many situations, the supply curve for an input (l) is not perfectly elasticWe will examine the polar case of monopsony, where the firm is the single buyer of the input in questionthe firm faces the entire market supply curveto increase its hiring of labor, t

23、he firm must pay a higher wage39Monopsony in theLabor MarketThe marginal expense (ME) associated with any input is the increase in total costs of that input that results from hiring one more unitif the firm faces an upward-sloping supply curve for that input, the marginal expense will exceed the mar

24、ket price of the input40Monopsony in theLabor MarketIf the total cost of labor is wl, thenIn the competitive case, w/l = 0 and MEl = wIf w/l 0, MEl w41Monopsony in theLabor MarketLaborWageSMElDl1Note that the quantity of labor demanded by this firm falls short of the level that would be hired in a c

25、ompetitive labor market (l*)l*w1w*The wage paid by the firm will also be lower than the competitive level (w*)42Monopsonistic HiringSuppose that a coal mines workers can dig 2 tons per hour and coal sells for $10 per tonthis implies that MRPl = $20 per hourIf the coal mine is the only hirer of miner

26、s in the local area, it faces a labor supply curve of the forml = 50w43Monopsonistic HiringThe firms wage bill iswl = l2/50The marginal expense associated with hiring miners isMEl = wl/l = l/25Setting MEl = MRPl, we find that the optimal quantity of labor is 500 and the optimal wage is $1044Labor Un

27、ionsIf association with a union was wholly voluntary, we can assume that every member derives a positive benefitWith compulsory membership, we cannot make the same claimeven if workers would benefit from the union, they may choose to be “free riders”45Labor UnionsWe will assume that the goals of the

28、 union are representative of the goals of its membersIn some ways, we can use a monopoly model to examine unionsthe union faces a demand curve for laboras the sole supplier, it can choose at which point it will operatethis point depends on the unions goals46Labor UnionsLaborWageDMRSThe union may wis

29、h to maximize the total wage bill (wl). This occurs where MR = 0l1 workers will be hired and paid a wage of w1l1w1This choice will create an excess supply of labor47Labor UnionsLaborWageDMRSThe union may wish to maximize the total economic rent of its employed members This occurs where MR = Sl2 work

30、ers will be hired and paid a wage of w2l2w2Again, this will cause an excess supply of labor48Labor UnionsLaborWageDMRSThe union may wish to maximize the total employment of its members This occurs where D = Sl3 workers will be hired and paid a wage of w3l3w349Modeling a UnionA monopsonistic hirer of

31、 coal miners faces a supply curve ofl = 50wAssume that the monopsony has a MRPL curve of the formMRPl = 70 0.1lThe monopsonist will choose to hire 500 workers at a wage of $1050Modeling a UnionIf a union can establish control over labor supply, other options become possiblecompetitive solution where

32、 l = 583 and w = $11.66monopoly solution where l = 318 and w = $38.2051A Union Bargaining ModelSuppose a firm and a union engage in a two-stage gamefirst stage: union sets the wage rate its workers will acceptsecond stage: firm chooses its employment level52A Union Bargaining ModelThis two-stage gam

33、e can be solved by backward inductionThe firms second-stage problem is to maximize its profits: = R(l) wlThe first-order condition for a maximum isR(l) = w53A Union Bargaining ModelAssuming that l* solves the firms problem, the unions goal is to choose w to maximize utilityU(w,l) = Uw,l*(w) and the first-order condition for a maximum isU1 + U2l = 0U1/U2 = l 54A Union Bargaining ModelThis implies that the union should choose w so that its MRS is equal to the slope of the firms labor demand functionThe result from t