Chapter 1: Introduction
, Learning Unit 1
Chapter 1 (Yu and Roos, 2018)
Why do we study the labour market?
To gain economic insight and the ability to answer policy questions.
Many questions concerning labour and the economy do not only relate to facts but a
normative questions. Value judgments are required from those involved because man
questions cannot be simply answered by looking at “the facts”.
Making good value judgments requires that one has as much information as possible
order to make informed decisions, trade-offs arise when attempting to address norm
questions. Facts help to crystallise the different trade-offs. Studying the labour market h
make an informed opinion in such matters.
Acquiring knowledge about the labour market will also help to avoid unint
consequences of certain policy decisions and therefore the need to revise policies only
time after being introduced.
, The difference between positive and normative economics (refer to pages 2 o
textbook)
Positive questions Normative questions
Look the narrow Look at the broader
e.g. What is? What should be?
, Unique characteristics of the labour mark
(Yu and Roos, 2018: 2-3)
➢ Labour Market- is an imaginary marketplace where labour is bought and sold. Alth
governed by the same principles of supply (Ss) and demand (Dd) that govern other
markets, this market is quite unique.
➢ The first difference between the labour market and goods market is that the worke
person and not a product. Principles of fairness or equity and humanness are the
essential elements of the labour market.
➢ An employer (purchaser of labour) buys the services of the worker and not the worke
the services and the worker cannot be separated. A contractual relationship, which
from what would be found in the product market, comes into being between the buye
seller of labour.
, Learning Unit 1
Chapter 1 (Yu and Roos, 2018)
Why do we study the labour market?
To gain economic insight and the ability to answer policy questions.
Many questions concerning labour and the economy do not only relate to facts but a
normative questions. Value judgments are required from those involved because man
questions cannot be simply answered by looking at “the facts”.
Making good value judgments requires that one has as much information as possible
order to make informed decisions, trade-offs arise when attempting to address norm
questions. Facts help to crystallise the different trade-offs. Studying the labour market h
make an informed opinion in such matters.
Acquiring knowledge about the labour market will also help to avoid unint
consequences of certain policy decisions and therefore the need to revise policies only
time after being introduced.
, The difference between positive and normative economics (refer to pages 2 o
textbook)
Positive questions Normative questions
Look the narrow Look at the broader
e.g. What is? What should be?
, Unique characteristics of the labour mark
(Yu and Roos, 2018: 2-3)
➢ Labour Market- is an imaginary marketplace where labour is bought and sold. Alth
governed by the same principles of supply (Ss) and demand (Dd) that govern other
markets, this market is quite unique.
➢ The first difference between the labour market and goods market is that the worke
person and not a product. Principles of fairness or equity and humanness are the
essential elements of the labour market.
➢ An employer (purchaser of labour) buys the services of the worker and not the worke
the services and the worker cannot be separated. A contractual relationship, which
from what would be found in the product market, comes into being between the buye
seller of labour.
