ECON0047 Labour Summary UCL

WEEK1


Introduction




bestworker lowest
possiblewage
wages




laborer good
DEMAND firm DEMAND consumers


supply consumes supply firm

outputtiedtosupply outputnottiedtoSUPPLY

requiresmoreregulation
4 pronetoexploitation


analysingthis weneedto
detrend
data
a employment twochange
showstrueeffectofchange

, ILaboursupply

force
Labour UtE
unemployed t employed
employed
employed
I
jjj.m.mn
participates
outofLF
force
Labour
participationrate
labourforce
adult topopnotininstitutions


unemployment.ae
amtmninaD
beingunemployedhessubjectivecriteria
4 understatesunemployed doesn'ttakethisintoaccount

Employment populationratio

moreaccuratemeasureoffluctuation ineconomicactivity

But IElpcouldbeeitherdue to to orexogenous f in P




t womendo
productivity
pittateA
parttime
y
workinghoursd
1A neoclassicalmodel
utility

U = f (C; L)

, violatestransitivity




needstotradeofflargeCformore

Budgetconstraint


I
easiertotest C = wh + V
w wage
h workinghours
V nonlabourincome

n t c
d
C = w(T ¡ L) + V
com nonlabour
income
C hours
leisure




slope


Cgivennowork O endowment



choiceofworkinghours
envex diminishingMrs
g w

t

1 ofhaste w

I w
Muc Ypention Ypentione

, LetV9
shiftsbudgetconstraint
up




p p

weknowthisisthecase


ineffery t givennonlabourincomet talweyst



Letwin
constraint
pivotsbudget up
es or




dominates
withhighwages




incomeeffect substitutioneffect
dominates dominates


effect
income substitutioneffect


clongsent

e
isolates Ic Al I p p me in
Al
pye th byincomeegret
t
fessedbyinconet
pricesarefixed Utilityisfixed
income

inincome f priceofleisure
Tdemandforleisure Ierististeisenstinising
purelytummy

onlyforthosealreadyworking