MGT. M259C: Analysis of Labor Markets --PP CM230 Labor Markets and Public Policy Daniel J.B. Mitchell Ho-su Wu Professor Anderson School and School of Public Affairs
MGT. M259C: Analysis of Labor Markets --PS CM230 Labor Markets and Public Policy Daniel J.B. Mitchell Ho-su Wu Professor Anderson School and School of Public Affairs
Course Mechanics
Where to find Prof. Mitchell – A409 Collins (Anderson) – 6361 PPB (SPA)
When to find Prof. Mitchell – Office hours: Mon.-Wed., 3:30-5 pm (A409) or by appointment
How to reach Prof. Mitchell – Phone: 310-825-1504 – E-mail: daniel.j.b.mitchell@anderson.ucla.edu
– Mailbox: A416 Collins
Prerequisite Some course somewhere in microeconomics P
S
D 0
Q
Required Readings
Ehrenberg & Smith, Modern Labor Economics, 9th edition, Pearson/Addison-Wesley, 2006 Articles on Internet/Intranet
Course Components
Readings
Handouts in class Video and audio excerpts Student reports
– Oral (round robin) – Written
In next class could YOU point out the key empirical facts from the supplementary readings?
Student Reports
Your opportunity to dig beneath the surface!
Course Components Readings Handouts in class Video and audio excerpts Student reports – Oral – Written
Final exam, Wed., June 11, 6:30 - 9:30 PM, location to be announced if not here
How does it all get counted?
?
Speak up!
Come on Time!
Come on Time!
“Eighty percent of success is just showing up.” (Woody Allen)
Ten Minute Break
Please observe the time limit
Course Schedule Week 1: Introduction: Analyzing the Labor Market Week 2: Standard Demand and Supply Analysis Week 3: Pay, Benefits, and Social Insurance Week 4: Internal Labor Markets, Implicit Contracts, New Institutionalism
Week 5: Productivity, Incentives, Technology, and Human Capital Weeks 6-7: Old Institutionalism: Unions and Collective Bargaining, Employee Voice, Public Sector Week 8: Women and Minority Experience in the Workforce Weeks 9-10: The Macro Side of Labor Market Analysis
– Unemployment and Labor Shortages – Inflation – Income Distribution
Final Exam
Student Projects Pick 3 ranked labor-market topics Get them to Prof. Mitchell by week 2 class (or earlier via email) Prof. Mitchell approves one by next class Give your tentative outline to Prof. Mitchell by week 7 Reports due week 9 (not on week 10 or exam week)
Avoid unfortunate situations
Adequately source your material Large extraction of text is inappropriate unless it is necessary to illustrate a point Visit www.deanofstudents.ucla.edu if you need guidance on standards All reports go through turnitin.com Follow the writing guidelines provided on these and other matters related to professional report preparation
Agenda Alternative
perspectives for interpreting information Economic Institutional ???
Basic
sources of information Key labor market definitions from the Current Population Survey (aka household survey) Analysis of recent data Labor force projections Real vs. nominal wages and the CPI
Alternative perspectives for interpreting information
Economic Institutional ???
Bounded rationality?
Nobelist Herbert Simon Prize awarded 1978
1916-2001
Basic sources of information
U.S. Bureau of Labor Statistics Monthly Labor Review Compensation and Working Conditions (on-line only) Employment and Earnings www.bls.gov Other federal agencies Bureau of the Census Bureau of Economic Analysis International sources ILO OECD Private sources Bureau of National Affairs, Inc. Manpower, Inc. Conference Board
Key labor market definitions from the Current Population Survey: 3 Statuses (Civilian) noninstitutional population aged 16 and over (Civilian) Labor Force (CLF) = E + U where:
E = Employed (1) U = Unemployed (2)
Those not in CLF are “not in the labor force” (3)
Note that one can be “not employed” without being “unemployed”
(1) Employed
Any paid work during reference week Worked in own business, profession, or farm Worked at least 15 hours as an unpaid family worker Temporarily absent from job due to:
Illness Bad weather Labor dispute Personal reason
(2) Unemployed No employment during reference week Were available for work Made specific effort to find work during 4 weeks ending with reference week Or were laid off and expected recall (even if did not search)
(3) Not in (Civilian) Labor Force Anyone not employed or unemployed
3 Commonly-Computed Ratios
Participation rate: CLF/Pop = (E+U)/POP where Pop = civilian noninstitutional population
Employment-to-population ratio: E/Pop
Unemployment rate: U/(E+U) = U/CLF
Note that unemployment rate is NOT = U/Pop
Civilian Labor Force Participation Rate
Civilian Labor Force Participation Rate
Civilian Labor Force Participation Rate
Employment to Population Ratio
Unemployment Rate
Unemployment Rate
Uses of Labor Market Data Condition
of
the labor market itself General condition of economy Financial indicator?
3 Commonly-Computed Ratios
Participation rate: CLF/Pop = (E+U)/POP where Pop = civilian noninstitutional population
Employment-to-population ratio: E/Pop
Unemployment rate: U/(E+U) = U/CLF
Note that unemployment rate is NOT = U/Pop
“I’ve stopped looking for work, which, I believe helps the economic numbers.”
What is the effect on the three ratios?
3 Commonly-Computed Ratios
Participation rate: CLF/Pop = (E+U)/POP where Pop = civilian noninstitutional population
Employment-to-population ratio: E/Pop
Unemployment rate: U/(E+U) = U/CLF
Two Surveys ď Ž
Establishment (Payroll) Survey 400,000 employing establishments in nonfarm sector Used for employment and wages, especially by detailed industry
ď Ž
Current Population Survey (household survey) 60,000 households Data on 3 labor-force statuses Other individual information
Comparing the Two Surveys CPS
*Agricultural, self-employed, unpaid family workers *People on unpaid leave
*Double counts moonlighters *Workers under age 16
Yes Yes No No ``
Jackie Coogan
Establishment
No No Yes Yes
Comparing the Two Surveys CPS
*Agricultural, self-employed, unpaid family workers *People on unpaid leave
*Double counts moonlighters *Workers under age 16
Yes Yes No No ``
Jackie Coogan
Establishment
No No Yes Yes
Projection Methodology
Project the adult population Project expected changes in labor force participation by demographic group Project the industry structure likely to prevail Project employment needs of these industries Break down employment by occupation, taking account of expected changes in productivity and technology
Two Types of Wages
Nominal vs. Real Wages
Deflating with a Price Index such as the CPI
Question: If I spent $10 on tomatoes, and tomatoes cost 50¢, how many tomatoes did I buy?
Answer: Nominal expenditure/price = $10/50¢ = 20 tomatoes
General rule for deflating nominal value to obtain quantity (real value):
Divide the nominal value by the appropriate price
Problem: What if the nominal expenditures involve more than one good?
Answer: You must deflate by a price index containing the relevant goods.