Premium Essay

Labor Economics

In:

Submitted By veektor
Words 670
Pages 3
Labour intensity mode of production
Process where the ratio of labour to other inputs is relatively large. Where alternative techniques of production are possible , labour intensity mode can be varied in response to changes in the relation between real wages and the cost of using other inputs. A mode of production referrers to the way production is carried out. Labour refers to the physical efforts or people are required to carry out a process of production. Therefore a labour intensive mode of production where more labour is employed than capital. Theory of value (economics):" Theory of value " is a generic term which encompasses all the theories within economics that attempt to explain the exchange value or price of goods and services .The labor theories of value (LTV) are heterodox economic theories of value which argue that the value of a commodity is related to the labor needed to produce or obtain that commodity Key questions in economic theory include why goods and services are priced as they are, how the value of goods and services comes about, and for normative value theories how to calculate the correct price of goods and services (if such a value exists). Theories of value fall into two main categories:
Intrinsic (objective) theories Intrinsic theories, as the name implies, hold that the price of goods and services is not a function of subjective judgements.
Subjective theories
Subjective theories hold that for an object to have economic value (a non-zero price), the object must be useful in satisfying human wants and it must be in limited supply. This is the foundation of the marginalist theory of value. In the context of explaining price, the marginal utility theory is not a normative theory of value. In either case what are being addressed are general prices, i.e. prices in the aggregate, not a specific price of a specific good or service in a

Similar Documents

Free Essay

Labor Economics

...Graphical/Tabular Report | U.S. Labor Market Trends | Ngoc Hoang Econ 4800 Prof. Ethan DoetschApril 21, 2014 | The labor force participation rate of men has been decreasing over the past 60 years while the trend for women has been increasing rapidly. However, after 2008 the labor force participation rate of women has slightly declined, from 61.2% to 58.5% in 2013. There are various factors accounting for the decline in men’s participation rate in labor force, including changes in laws and government regulations. Social security retirements for the elderly population have affected labor force participation rates. Besides, Social Security Act, which was amended in 1960, has allowed individuals under age 50 eligible to receive disability payments. By providing people with non-labor income, it reduces the incentive to work which leads to people dropping out of the labor force. In contrary, remarkable changes in labor force participation rates of women reflected their significant role in the world of work over the past 60 years. Access to higher education and training used to be a significant barrier to women’s participation in the workforce. However, since the 1950s, the ability to pursue higher education, occupational structure of the economy and medical advances have allowed women to choose between household labor and work in the labor market in order to maximize their utility. Labor-saving technology and home-care products such as washers and dryers, dishwashers, etc...

Words: 1924 - Pages: 8

Free Essay

Labor Economics

...Chapter 1: Supply of labor: depends on: * Positively on wage * Negatively on alternate wage * Positively on population size Demand for labor: * Increase in W lowers demand * Demand for steel reaises demand for L * Rental price increase demand for labor if K and L are subsititutes * Substitution and scale effect- increase in w increase production and increases steel price, cut back on steel and less need for worker * Scale effect: increase in R decreases both demand for capital and labor Neoclassical economics: * Methodological indivudalism: * Rational choice: * Maximize * Answers: who is the decision maker, what goals are, what constraints * Equalibirum * Pareto efficient: cannot increase well being on one without leaving others unchanged New Insitutituional economics: explain instiutituions in way of action and goal of indivualds in them Bounded limited rationality: limited ability to calculate how their deicion affects the future but aware that it does Chapter 2: Employment: 1 week 16+, 15 hous. Un: 4 weeks Not counted: Discouraged: 12 months, Marginally attatched: not looking for one Labor costs: earnings + benefits= total comp Straight line: gross expludes overtime. Measured in dolalrs/hour CPI: biased to overstate increase in true cost of living: does not allow for substitution since its calculated with a fixed basket of goods Chapter 3: Answers to 3 questions: firm is deicion maker,...

Words: 621 - Pages: 3

Premium Essay

Labor Economics Excercise 5.2

...Labor economics: problem 5.2 Consider the demand for and supply of risky jobs : a. Derive the algebra that leads from equations (5.4) and (5.5) to equation (5.6). (5.4) π0=pα0E*- w0 E* (5.5) π1=pα1E*- w1 E* It is given that a profit-maximizing firm offers a risky environment if π1>π0 (when the profits the firm can earn when it chooses to be a risky firm exceed the profits the firm can earn when it chooses to be a safe firm) and a profit-maximizing firm offers a safe environment if π1<π0 (when the profits the firm can earn when it chooses to be a safe firm exceed the profits the firm can earn when it chooses to be a risky firm). Offering a safe working environment: | Offering a risky working environment: | π1<π0↔pα1E*- w1 E* < pα0E*- w0 E*↔pα1- w1 < pα0- w0 ↔pα1-pα0- w1 < - w0 ↔pα1-pα0 < w1 - w0 ↔θ<w1-w0 ↔ w1-w0 > θ (5.6) | π1>π0↔pα1E*- w1 E* > pα0E*- w0 E*↔pα1- w1 > pα0- w0 ↔pα1-pα0- w1 > - w0 ↔pα1-pα0 > w1 - w0 ↔θ>w1-w0 ↔ w1-w0 < θ (5.6) | b. Describe why the supply curve in figure 5.2 is upward sloping. How does you explanation incorporates θ? Why? Figure 5.2 illustrates the supply curve to risky jobs in a particular labor market. The supply curve indicates how many workers are willing to execute a risky job as a function of the wage differential between the risky job and the safe job (also known as the reservation price or ∆w=w1-w0). When it is assumed that all workers dislike risk, no worker would be...

Words: 562 - Pages: 3

Free Essay

Economic and Philosophical Manuscripts of 1844: Alienated Labor

...The chapter on alienated labor clarifies the moral case against capitalism, at least as Marx saw it at this time. This has been touched on in a couple of earlier posts here but I wanted to highlight one piece of the argument. Marx's point here is that alienation is prior to private property and to such quantitative expressions of private property as exploitation, wage inequality, etc. “The alienation of the product of labour merely summarizes the alienation in the work activity itself.” In other words, how much of the product of alienated labor is available to the worker to consume is a secondary, and ultimately unimportant, issue compared with the fact of alienation itself. A couple pages later he makes this point even more emphatically: “An enforced increase in wages … would be nothing more than a better remuneration of slaves, and would not restore, either to the worker or to the work, their human significance and worth.” The claim that the level of wages is politically and morally irrelevant is very different from mainstream and even many Marxist approaches that see questions of wellbeing in terms of consumption and justice in terms of distribution of income, and don't consider the qualitative character of work at all. Marx characterizes alienation of labor in various ways: - “the work is external to the worker”; - “he does no fulfill himself in his work”; - the worker “has a feeling of misery rather than wellbeing”; - the worker “does not develop freely his...

Words: 725 - Pages: 3

Free Essay

Impact of Female Labor Force Participation in Economic Growth in Usa and Turkey Between 1990 and 2010

...Impact of Female Labor Force Participation in Economic Growth in USA and Turkey between 1990 and 2010 Name Institution Course Tutor Date Table of Contents Introduction 3 Background of the Topic 4 Research Problem 4 Research Questions 5 Research Aims and Objectives 5 Literature Review 6 The Trend in the Female Labor Force Participation in United States and Turkey between 1990 and 2010 6 The Economic Situations in America and Ukraine 7 The Relationship between Female Labor Force Participation and Economic Growth 9 Research Methodology 10 Research Design 11 Research Philosophy 11 Research Approach 11 Selecting Respondents 12 Research Ethics 12 Data Collection Instruments 13 Data Analysis 13 References 14 Introduction Labor force growth is essential because it drives the economic prosperity of a given country. The universal understanding of the labor force encompasses working people as well as those looking for employment opportunities. Most scholars portray it as a dynamic concept that is a product of the political, social and economic factors within a given country. The most predominant notion today is that changes in the labor force participation, as well as population changes, has culminated in a labor force that is more diversified. In specific, relatively more women are represented in the labor force compared to the previous centuries. The diversity in the workforce shaped the economies of developed countries such as America...

Words: 3816 - Pages: 16

Premium Essay

Prevailing Wages

...Prevailing Wages Introduction The U.S. Congress passed the Davis-Bacon Act in 1931 during the Great Depression. According to this act, a law was implemented that required governmental contractors to pay ‘prevailing wages’ on projects that it took on behalf of the federal government. The effect of this legislation was that more than 40 states adopted the ‘little Davis-Bacon Acts’ or ‘prevailing wage’ laws. This was then, but later on, many states repealed these statutes. Still, many states today, including Michigan, carry on with such laws that seem to have become obsolete from those Depression-days (Vedder 1997). This paper shall attempt to take a closer look as to what the implications of implementing such laws are, with scrutiny of these laws as enacted in the state of Michigan. Various statistics shall be presented to highlight the advantages and disadvantages of using such laws in a state. The paper shall discuss the various issues that Michigan has faced in regards to these laws and will come up with some solutions and recommendations for the state of Michigan on whether it should continue to implement these rules or repeal from them. Many jurisdictions, including that of the federal government, set the prevailing wages exactly at or very near to those that are demanded by the laborers according to the union-scale. “Prevailing wage laws, then, force contractors on government construction or other projects to pay their employees at the same rate as unionized members of...

Words: 3688 - Pages: 15

Premium Essay

Prevailing Wages

...Prevailing Wages Introduction The U.S. Congress passed the Davis-Bacon Act in 1931 during the Great Depression. According to this act, a law was implemented that required governmental contractors to pay ‘prevailing wages’ on projects that it took on behalf of the federal government. The effect of this legislation was that more than 40 states adopted the ‘little Davis-Bacon Acts’ or ‘prevailing wage’ laws. This was then, but later on, many states repealed these statutes. Still, many states today, including Michigan, carry on with such laws that seem to have become obsolete from those Depression-days (Vedder 1997). This paper shall attempt to take a closer look as to what the implications of implementing such laws are, with scrutiny of these laws as enacted in the state of Michigan. Various statistics shall be presented to highlight the advantages and disadvantages of using such laws in a state. The paper shall discuss the various issues that Michigan has faced in regards to these laws and will come up with some solutions and recommendations for the state of Michigan on whether it should continue to implement these rules or repeal from them. Many jurisdictions, including that of the federal government, set the prevailing wages exactly at or very near to those that are demanded by the laborers according to the union-scale. “Prevailing wage laws, then, force contractors on government construction or other projects to pay their employees at the same rate as unionized members of...

Words: 3688 - Pages: 15

Premium Essay

Prevailing Wages

...Introduction The U.S. Congress passed the Davis-Bacon Act in 1931 during the Great Depression. According to this act, a law was implemented that required governmental contractors to pay ‘prevailing wages’ on projects that it took on behalf of the federal government. The effect of this legislation was that more than 40 states adopted the ‘little Davis-Bacon Acts’ or ‘prevailing wage’ laws. This was then, but later on, many states repealed these statutes. Still, many states today, including Michigan, carry on with such laws that seem to have become obsolete from those Depression-days (Vedder 1997). This paper shall attempt to take a closer look as to what the implications of implementing such laws are, with scrutiny of these laws as enacted in the state of Michigan. Various statistics shall be presented to highlight the advantages and disadvantages of using such laws in a state. The paper shall discuss the various issues that Michigan has faced in regards to these laws and will come up with some solutions and recommendations for the state of Michigan on whether it should continue to implement these rules or repeal from them. Many jurisdictions, including that of the federal government, set the prevailing wages exactly at or very near to those that are demanded by the laborers according to the union-scale. “Prevailing wage laws, then, force contractors on government construction or other projects to pay their employees at the same rate as unionized members of the relevant occupation—whether...

Words: 3691 - Pages: 15

Premium Essay

Prevailing Wages

...Prevailing Wages Introduction The U.S. Congress passed the Davis-Bacon Act in 1931 during the Great Depression. According to this act, a law was implemented that required governmental contractors to pay ‘prevailing wages’ on projects that it took on behalf of the federal government. The effect of this legislation was that more than 40 states adopted the ‘little Davis-Bacon Acts’ or ‘prevailing wage’ laws. This was then, but later on, many states repealed these statutes. Still, many states today, including Michigan, carry on with such laws that seem to have become obsolete from those Depression-days (Vedder 1997). This paper shall attempt to take a closer look as to what the implications of implementing such laws are, with scrutiny of these laws as enacted in the state of Michigan. Various statistics shall be presented to highlight the advantages and disadvantages of using such laws in a state. The paper shall discuss the various issues that Michigan has faced in regards to these laws and will come up with some solutions and recommendations for the state of Michigan on whether it should continue to implement these rules or repeal from them. Many jurisdictions, including that of the federal government, set the prevailing wages exactly at or very near to those that are demanded by the laborers according to the union-scale. “Prevailing wage laws, then, force contractors on government construction or other projects to pay their employees at the same rate as unionized members of...

Words: 3693 - Pages: 15

Premium Essay

Accounting

...not allow for any inefficiency. Ideal standards are rarely, if ever, attained. Practical standards can be attained by employees working at a reasonable, though efficient pace and allow for normal breaks and work interruptions. 11-3 Under management by exception, managers focus their attention on results that deviate from expectations. It is assumed that results that meet expectations do not require investigation. 11-4 Separating an overall variance into a price variance and a quantity variance provides more information. Moreover, price and quantity variances are usually the responsibilities of different managers. 11-5 The materials price variance is usually the responsibility of the purchasing manager. The materials quantity and labor efficiency variances are usually the responsibility of production managers and supervisors. 11-6 The materials price variance can be computed either when materials are purchased or when they are placed into production. It is usually better to compute the variance when materials are purchased because that is when the purchasing manager, who has responsibility for this variance, has completed his or her work. In addition, recognizing the price variance when materials are purchased allows the company to carry its raw materials in the inventory accounts at standard cost, which greatly simplifies bookkeeping. 11-7 This combination of variances may indicate that inferior quality materials were purchased at a discounted price, but the low-quality...

Words: 14048 - Pages: 57

Premium Essay

Marketing

...CHAPTER 2 The Theory of Individual Labor Supply I. THE WORK-LEISURE DECISION: BASIC MODEL A. Indifference Curves 1. Negative Slope 2. Convex to Origin 3. Indifference Map 4. Different Work-Leisure Preferences B. Budget Constraint C. Utility Maximization D. Wage Rate Changes: Income and Substitution Effects 1. Income Effect 2. Substitution Effect 3. Net Effect E. Graphic Portrayal of Income and Substitution Effects F. Rationale for Backward-Bending Supply Curve G. Empirical Evidence H. Elasticity versus Changes in Labor Supply II. APPLYING AND EXTENDING THE MODEL A. Nonparticipants and the Reservation Wage B. Standard Workday 1. Overemployment 2. Underemployment C. Premium Pay versus Straight Time D. Income Maintenance Programs 1. Three Basic Features a. The Income Guarantee or Basic Benefit, B b. The Benefit-Reduction Rate, t c. The Break-Even Level of Income, Yb 2. Illustration 3. Controversy 4. The End of Welfare as an Entitlement WORLD OF WORK 1. Sleep Time Linked to Earnings 2. The Carnegie Conjecture 3. New Overtime Rules 4. The Labor Supply Impact of the Earned Income Tax Credit GLOBAL PERSPECTIVE 1. Annual Hours of Work per Employee ...

Words: 3951 - Pages: 16

Free Essay

On 5th January 1914 the Ford Motor Company Announced That It Would More Than Double the Wages of Its Workers. Briefly Describe the History of This Decision and Relate to the Theory of Incentives and Efficiency Wages.

...On 5th January 1914 the Ford Motor company announced that it would more than double the wages of its workers. Briefly describe the history of this decision and relate to the theory of incentives and efficiency wages. When Henry Ford introduced the five-dollar day on the 12th of January 1914, many of his competitors might have questioned the success of this policy. Today, it is well established that Ford’s strategy was a key reason for the company’s early success and is often documented as an exemplary application of the efficiency-wage theory. This essay will briefly outline the history and implications that have led to the five-dollar day and relate it to the theory of incentives and efficiency wages. Henry Ford founded the Ford Motor Company in 1903. During the first few years the company remained relatively small and it was only with the introduction of the T-Model in 1908 and the transformation to assembly line production that Ford could expand his market share and increase the company’s profitability. However, as Raff and Summers noted, assembly line production resulted in a high degree of specialisation of the different production steps. Work at Ford’s became more and more menial, leading to dissatisfaction among the workforce, which reflected in a significant annual turnover of 370% in 1913. Although there was no evidence that Ford had problems filling his vacancies, the absenteeism and high turnover undoubtedly resulted in costs that Ford had aimed to reduce. It...

Words: 1027 - Pages: 5

Premium Essay

Wage Administration

...PCM HANDOUT On Wage Administration Wages- Definition “Wages" means all remuneration capable of being expressed in terms of money, which would, if the terms of employment, expressed or implied, were fulfilled, be payable to a workman in respect of his employment or of work done in such employment, and includes– (i) such allowances (including dearness allowance) as the workman is for the time being entitled to; (ii) the value of any house accommodation, or of supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of food-grains or other articles; (iii) any travelling concession; 2*[(iv) any commission payable on the promotion of sales or business or both;] but does not include– (a) any bonus; (b) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the workman under any law for the time being in force; (c) any gratuity payable on the termination of his service;] Statutory Minimum Wages Minimum Wages as notified by the Government under Minimum Wages Act, 1948 for different scheduled employments are called as Statutory Minimum Wages. Bare Minimum Wage Bare Minimum Wage is the minimum income necessary for a worker to meet needs considered basic. These needs include shelter (housing) and other incidentals such as clothing and nutrition. Minimum Wage Minimum wage is the wage that is able to provide not only for...

Words: 2391 - Pages: 10

Premium Essay

Transition from School to Work

...Transition from School to Work Senior Thesis (Progress Report) Theoretical Specification Nowadays the young generation of the United States encounters some major difficulties in finding decent jobs immediately after completing their studies. Such obstacles will affect their early labor market experience, wages and the time spent unemployed. This paper will focus on the estimation of job searches given the restrictions implemented in a job search theory. Moreover, this structural approach helps view the market in a different way. On one hand, the labor market is a place where numerous jobs are offered and there are only few takers and on the other hand, there are only few jobs available but many takers. As an addition, the structural approach produces predictions about the dynamics in labor force for each individual.[1] As a guiding paper I will follow Kenneth Wolpin (1987)’s paper. Standard discrete-time search model will be applied, meaning a non-continuous time search model. It includes the following characteristics: -First, the search horizon is limited since graduates will not be able to borrow due to a lack of future income; - Second, the probability of receiving a job offer (given the fixed length of time) may be dependent on job search duration; - Third, there is a cost of getting a job offer in a given period, which is not a subject to choice. This cost represents an opportunity cost of search time and it is a forgone leisure; - Fourth, in this...

Words: 1098 - Pages: 5

Premium Essay

Nike Debate

...obligation to contract with subcontractors that uphold the rights and wages of their workers. The pay and working conditions that the workers of subcontractors receive is a direct result from the contract that has been negotiated by Nike. If Nike had chosen to make improved working conditions a part of the arrangement, or ensured the conditions of those workplaces met some form of human right standards those benefits may have been passed on to the workers. Since the workers are there to produce the products for Nike, the fact that the company does not actually own the facilities is irrelevant. Nike is the beneficiary of the work done in the factory and as a publicly owned firm should be accountable for the way its products are created. 2. What labor standards regarding safety, working conditions, overtime, and the like, should Nike hold foreign factories to: those prevailing in that country, or those prevailing in the United States. Nike should require all factories regardless of their location to maintain the same standards when it comes to working conditions, overtime, and any other standards. It should be no different if the product was manufactured in the United States. Companies have the fiduciary rights to protect their employees and the rights of those that product their products by subcontractors. Working conditions, wages, and so forth can be improved around the world. Nike has the responsibility to hold suppliers to better conditions. In doing so, Nike may find that it receives...

Words: 1134 - Pages: 5