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Labor economics
The original motivation for writing Labor Economics grew out of my years of teaching labor economics to undergraduates. After trying out many of the textbooks in the market, it seemed to me that students were not being exposed to what the essence of labor economics was about: To try to understand how labor markets work. As a result, I felt that students did not really grasp why some persons choose to work, while other persons withdraw from the labor market; why some firms expand their employment at the same time that other firms are laying off workers; or why earnings are distributed unequally.
The key difference between Labor Economics and competing textbooks lies in its philosophy. I believe that knowing the story of how labor markets work is, in the end, more important than showing off our skills at constructing elegant models of the labor market or remembering hundreds of statistics and institutional details summarizing labor market conditions at a particular point in time.
I doubt that many students will (or should!) remember the mechanics of deriving a labor supply curve or what the unemployment rate was at the peak of the Great Recession 10 or 20 years after they leave college. However, if students could remember the story of how the labor market works—and, in particular, that workers and firms respond to changing incentives by altering the amount of labor they supply or demand—the students would be much better prepared to make informed opinions about the many proposed government policies that can have a dramatic impact on labor market opportunities, such as a “workfare” program requiring that welfare recipients work or a payroll tax assessed on employers to fund a national health-care program or a guest worker program that grants tens of thousands of entry visas to high-skill workers. The exposition in this book, therefore, stresses the ideas that labor economists use to understand how the labor market works.
The book also makes extensive use of labor market statistics and reports evidence obtained from hundreds of research studies. These data summarize the stylized facts that a good theory of the labor market should be able to explain, as well as help shape our thinking about the way the labor market works. The main objective of the book, therefore, is to survey the field of labor economics with an emphasis on both theory and facts. The book relies much more heavily on “the economic way of thinking” than competing textbooks. I believe this approach gives a much better understanding of labor economics than an approach that minimizes or ignores the story-telling aspects of economic theory.
Requirements
The book uses economic analysis throughout. All of the theoretical tools are introduced and explained in the text. As a result, the only prerequisite is that the student has some familiarity with the basics of microeconomics, particularly supply and demand curves. The exposure acquired in the typical introductory economics class more than satisfies this prerequisite. All other concepts (such as indifference curves, budget lines, production functions, and isoquants) are motivated, defined, and explained as they appear in our story. The book does not make use of any mathematical skills beyond those taught in high school algebra (particularly the notion of a slope).
page viiLabor economists also make extensive use of econometric analysis in their research. Although the discussion in this book does not require any prior exposure to econometrics, the student will get a much better “feel” for the research findings if they know a little about how labor economists manipulate data to reach their conclusions. The appendix to Chapter 1 provides a simple (and very brief) introduction to econometrics and allows the student to visualize how labor economists conclude, for instance, that winning the lottery reduces labor supply, or that schooling increases earnings. Additional econometric concepts widely used in labor economics—such as the difference-in-differences estimator or instrumental variables—are introduced in the context of policy-relevant examples throughout the text.
Changes in the Eighth Edition
The Eighth Edition offers a thorough rewriting of the entire textbook, making it the most significant revision in quite a few years. As one edition rolls into the next and material gets added to or deleted from the textbook, I think many authors discover that the book keeps moving further away from what the author originally intended. There comes a time when one needs to take a step back, get reacquainted with the entire manuscript free from the pressures of having to get the next edition out the door, take stock of how all the pieces fit together in the context of an ever-evolving field, and do a thorough rethinking of how to best present the material once more as part of a cohesive whole. I experienced that feeling about 3 years ago, shortly after the last edition was published, and decided at the time to tackle the Eighth Edition as if I were writing the textbook for the first time. And that is precisely what I have done.
Readers will find that although much will seem familiar, big chunks of the book have been completely rewritten and streamlined. The book still offers many detailed policy discussions and still uses the evidence reported in state-of-the-art research articles to illustrate the many applications of modern labor economics. The text continues to make frequent use of such econometric tools as fixed effects, the difference-in-differences estimator, and instrumental variables—tools that play a central role in the toolkit of labor economists. And the Eighth Edition even adds to the toolkit by introducing the synthetic control method.
But the text is now much leaner, making it a shorter and easier-to-read book. And it emphasizes, from the very beginning, how these empirical tools are a central part of the methodological revolution that changed labor economics in the past two decades. Empirical analysis must be much more than calculating a correlation describing the relation between two variables. It must instead reflect a well-thought-out strategy that attempts to identify the direct consequences of the many shocks that continually hit the labor market.
Among the specific changes in the Eighth Edition are:
There are several new extensions of theoretical concepts throughout the book, including a new section on household production (Chapter 2) and on the education production function (Chapter 6). Similarly, there are more detailed discussions of some empirical applications, including the signaling value of the General Equivalency Diploma (GED) and the male–female wage gap in the “gig economy.”
The important distinction that empirical labor economics now makes between estimating correlations and identifying consequences from specific labor market shocks is introduced early in the book. Specifically, Chapter 2 has a new section discussing the page viiiage-old distinction between correlation and causation in the context of evidence from the labor supply literature, which measures the labor supply consequences of winning a lottery or of how taxi drivers are compensated.
The section on the employment effects of the minimum wage provides a detailed discussion of the studies that measure the impact of the minimum wage in Seattle, with an illustration of how empirical work in labor economics, particularly when it addresses politically contentious issues, can often lead to wildly different conclusions.
A reorganization of the human capital material in Chapters 6 and 7. Because of the voluminous research on the economics of education, a detailed discussion of the education decision and of how to measure the returns to education now fills up Chapter 6. Chapter 7 continues the study of the human capital model by focusing on postschool investments, on the link between human capital and the wage distribution, and on the determinants of increasing wage inequality. The discussion also introduces the canonical model used in the wage structure literature that uses the Constant Elasticity of Substitution (CES) production function to derive a relative demand curve between high- and low-skill labor. The Mathematical Appendix now includes a detailed derivation of how the model is used to estimate the elasticity of substitution between two labor inputs.
The material on immigration, again one of those topics where the number of studies is growing rapidly, has also been reorganized and tightened. Some users of the earlier edition suggested that because of the intimate link between the wage impact of immigration and the efficiency gains from immigration, the introduction of the immigration surplus should follow immediately after the discussion of the wage impact, and I concur. The immigration material in the geographic mobility chapter now focuses on two issues that are more directly related to the migration decision: The self-selection of immigrants and the assimilation of immigrants in the receiving labor market.
Organization of the Book
The instructor will find that this book is much shorter than competing labor economics textbooks—particularly after the thorough rewriting in the Eighth Edition. The book contains an introductory chapter, plus 11 substantive chapters. If the instructor wished to cover all of the material, each chapter could serve as the basis for about a week’s worth of lectures in a typical undergraduate semester course. Despite the book’s brevity, the instructor will find that all of the key topics in labor economics are covered systematically. The discussion, however, is kept to essentials as I have tried very hard not to deviate into tangential material, or into 10-page-long ruminations on my pet topics.
Chapter 1 presents a brief introduction that exposes the student to the concepts of labor supply, labor demand, and equilibrium. The chapter uses the “real-world” example of the Alaskan labor market during the construction of the oil pipeline to introduce these concepts. In addition, the chapter shows how labor economists contrast the theory with the evidence, as well as discusses the limits of the insights provided by both the theory and the data. The example used to introduce the student to regression analysis is drawn from “real-world” data—and looks at the link between differences in mean wages across occupations and differences in educational attainment as well as the “female-ness” of occupations.
https://bookshelf.vitalsource.com/reader/books/9781260568554
Ketersediaan
| Call Number | Location | Available |
|---|---|---|
| 331 BOR l | PSB lt.1 - B. Wajib | 1 |
| Penerbit | New York Mc Graw Hill., 2020 |
|---|---|
| Edisi | 8 |
| Subjek | Labor market Labor economics |
| ISBN/ISSN | 9781260565522 |
| Klasifikasi | 331 |
| Deskripsi Fisik | xiii, 453 p. : ill. ; 28 cm |
| Info Detail Spesifik | - |
| Other Version/Related | Tidak tersedia versi lain |
| Lampiran Berkas |
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