The labor market
description
Transcript of The labor market
1
The labor market
Labor Supply– Workers
Labor Demand– Firms
Market Clearing?– Full employment
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Characteristics or modes of mobilization of labor force
Non-Commodity Forced -> Slave Free
– Household– Militant
Wage earner– Civil servant– House helpers
Commodity Prisoners Free
– Self employed – informal sector– Peasants
Wage earner– private firms
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Structure of labor market
U n de r th e leg a l a ge
F o rm al in fo rm a l
F u ll t im e e m p lo yed
u n vo lu n ta ry vo lun ta ry
u n de re m p lo yed
E m plo yedR a te o f E m plo ym e nt
U n e m p lo yedR a te o f U n e m p lo ym e nt
E co no m ica ly A c tive P o p u la tionR a te o f P a rtic ipa tion
In a ctive P op u la tion
B e tw ee n 1 5 a n d 65 O ver the leg a l a ge
T o ta l P op u la tion
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Structure of Labor Market
0
50000
100000
150000
200000
250000
300000
350000
Total Age Activity Employment Type ofEmployment
Under Legal age
active
Inactive
Employed
Unemployed
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Labor SupplyPeople in the labor force
Economically Active Population “EAP”– civilian population with or without a job
that have been looking for one in a period of time before the survey (BLS last 4 weeks)
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People not in the labor force
Participating as students in the education system
Unpaid household work Retired or with pensions For health reasons Volunteer in community services
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Research questions on the labor supply
Who is in the labor market? Who is out of the labor market?
– Age
– Gender
– Position in the household
– Location
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Why the participation rate changes overtime?
Cultural factors– women in the labor market
– scholarships and school retention
– more years of study Discouraged workers effect Additional worker effect
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Some participation rates in the US labor market
0
10
20
30
40
50
60
70
80
90
Total 16-19 20-24 25-54 55 /older
1980
1990
2000
10
Differences in participation rate according to gender
40
50
60
70
80
90
100
Male 16-24 Female16.24 Male 25-54 Female 25-54
80
90
0
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Participation rate according to race
6061626364656667686970
White Black Asian Hispanic
1980
1990
2000
12
Participation rate according race and gender
0
10
20
30
40
50
60
70
80
90
Whitemale
WhiteFemale
BlackMale
BlackFemale
Hisp.Male
Hisp.Female
1980
1990
2000
13
Civilian population between 16 and up and employed population
115000
120000
125000
130000
135000
140000
145000
92 93 94 95 96 97 98 99 0 1 2
EAP
Employed
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Research questions on the labor demand
Who has a job?– Gender
– Age
– Qualifications
– Salary/Wage
– Hours of work
– Relation with the owner of the firm
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Rate of Employmentemp/eap
6060.5
6161.5
6262.5
6363.5
6464.5
65
92 93 94 95 96 97 98 99 0 1 2
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What means to be employed
Wage earners– a person that at the time of the
survey/census was working with a salary in cash or in kind
– with a job but not working at the time of the survey due to various factors
– members of the army (where not professionals)
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What means to be employed
Independent workers– Professionals
– Self Employed
– Employers
– Workers without pay
devoting a number of hours to earn money or goods or services
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Some problems with the estimation of the employment
Underestimates the production for self consumption, especially at rural level
The legal age hides child labor Informal workers above the age of
retirement Seasonal workers not captured by the
survey
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Research questions on the Labor Demand
Who is unemployed?– Age
– Gender
– Ethnicity
– Duration of unemployment
– Turn over
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Unemployed and rate of unemployment
0
2000
4000
6000
8000
10000
12000
92 93 94 95 96 97 98 99 0 1 2
0
1
2
3
4
5
6
7
8
# unemployed
Rate of Unemployment
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Research questions on the Labor Supply
What means to be under employed?– Does she/he wants to work more
hours?
– Social/Demographic considerations
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What is to be under employed
Open under employment (visible)people working for a salary o independently
involuntary working less than the normal (legal) working hours and willing to do it in the same job or getting an additional one.
Hidden under employment– Low hourly payment according to qualifications
Voluntary under employment
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Research questions on the labor supply
Who is over employed?– Hours of work
– Social/demographic characteristics
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Evolution of the civilian population above 16 years old
Evolution of the Civilian Population over 16 years
y = 2352.1x + 139169
R2 = 0.9935
135000
145000
155000
165000
175000
185000
195000
205000
215000
225000
1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
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Civilian and EAP
y = 2352.1x + 139169
R2 = 0.9935
y = 1918.5x + 83525
R2 = 0.9924
80000
100000
120000
140000
160000
180000
200000
220000
240000
1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
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Rate of participation (total)
0
50000
100000
150000
200000
250000
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
56
58
60
62
64
66
68
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Participation rate accoding to gender
0
10
20
30
40
50
60
70
80
90
Total
Male
Female
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Evolution of employment and rate of employment (Total)
020000400006000080000
100000120000140000160000
505254565860626466
Employed population Rate of employment
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-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
-15.0% -10.0% -5.0% 0.0% 5.0% 10.0%
Total Male Female Youngsters
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Evolution of unemployed and unemployment rate
0
2000
4000
6000
8000
10000
12000
0
2
4
6
8
10
12
Unemployed Unemployment rate
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People not in the labor force
50000
55000
60000
65000
70000
75000
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People not in the labor force but want a job now
4000
4500
5000
5500
6000
6500
1994 1995 1996 1997 1998 1999 2000 2001 2002
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Male and Female unemployment
0
2
4
6
8
10
12
Male Female
34
Some dynamic analysis of unemployment
0
5
10
15
20
25
0 5 10 15 20 25
Male Female Youngsters
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Changes in labor participation
It is difficult to define a single labor supply function
For adult males participation is a function of the demographic growth
For adult females it is a function of the income of the household (expresed on the income of the HHH, plus a trend that reflects cultural factors
Additonal workers are function of what happen with the other two.
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Labor supply functions
Male participation– f(pop.growth)
Female participation– f(wages, prime worker unemp, pw Y)
Youth participation– f(pw unemp, pw Y, Female emp.)
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Some findings
Male participation have been declining over time in relative terms
Female participation, excluded the growing trend, tend to be counter cyclical if employment represents the cycle.
Youth have a similar behaviour to females
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Some findings
In the US, female participation can have an U shaped behavior, since wage increases may induce it.
With youngsters the trend is less clear
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How may an ELR program affect labor supply
Depends on the ELR benefit– If it is high enough to support a family
there should be no changes, unless the discouraged effect was high before the ELR
– If it is not enough the effect can be a sudden increase in the rate of participation of additional workers
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Other effects of ELR on labor supply
If schooling is a complementary part of ELR (scholarships for youngsters) the rate of participation could decrease.
If childcare is considered and ELR activity, rate of participation may decrease
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The Labor Demand
Depends mainly on the level of economic activity (GDP growth) and labor costs relative to the price of capital goods– emp = f( GDP, w/k)
The employment to GDP elasticity varies according to the business cycle
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Labor Demand
Studies all over the world have found that price elasticity of labor is very low, ranging from 0.15 to 0.45 in most of the cases
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The need to work with different labor markets
In countries with clear formal and informal sectors, the demand for labor should be taken into account in a different way.
Informal markets are more wage sensitive than the rest.
Informal markets are a way to escape “stickiness” of unionized wages