劳动经济学 Chapter 2 Labor Supply

The limit on the consumption bundles that a consumer can afford、Indifference curveshows consumption bundles that give the consumer the same level of satisfaction

Chapter 2 Labor Supply

• 2.1 Measuring the Labor Force
  • Labor Force
    • Labor Force = Employed + Unemployed(LF = E + U)
  • Labor Force Participation Rate
    • LFPR = LF/P
    • P = civilian adult population 16 years or the older who are not in institutions
  • Employment-Population Ratio
    • EPR = E/P
  • Unemployment Rate
    • UR = U/LF
• 2.2 The Theory of Consumer Choice
  • Budget constraint (消费限制)
    • The limit on the consumption bundles that a consumer can afford
    • C = wh + V
  • Indifference curve (无差异曲线)
    • Indifference curveshows consumption bundles that give the consumer the same level of satisfaction
    • Four Propertoes
      • 1. Indifference curves are downwardsloping
      • 2. Higher indifference curves are preferred to lower ones.
      • 3. Indifference curves cannot cross.
      • 4. Indifference curves are bowed inward.
    • Perfect Substitutes
      • Two goods with straight-line indifference curves, constant MRS
    • Perfect complements
      • Two goods with right-angle indifference curves
  • Marginal rate of substitution (MRS)（消费的边际替代率）
  • Marginal utility (MU)
    • Additional satisfaction obtained from consuming one additional unit of a good
    • 𝑀𝑈𝐹 ∗ ∆𝐹 + 𝑀𝑈𝑀 ∗ ∆𝑀 = 0
  • Optimization: What the Consumer Chooses
• 2.3 The Hours of Work Decision
  • Optimal consumption is given by the point where the budget line is tangent to the indifference curve
• 2.4 The Effect of a Change in Nonlabor Income on Hours of Work
  • Income effect
    • Higher wage boosts income, and allows people to have more leisure
  • Substitution effect
    • Higher wage increases the opportunity cost of leisure such that the individual choose less leisure and more consumption.
• 2.5 To Work or Not to Work?
  • Reservation wage
    • The lowest wage rate that would make the person indifferent between working and not working.
    • Rule 1: if the market wage is less than the reservation wage, then the person will not work.
    • Rule 2: the reservation wage increases as nonlabor income increases
• 2.6 Labor Supply Elasticity
• 2.7 Effect
  • Effect of a Cash Grant on Work Incentives
  • Effect of a Welfare Program on Hours of Work
    • Policy Application: The Earned-Income Tax Credit (EITC)
• 2.8 Labor Supply over the Life Cycle
• 2.9 Retirement
  • The Impact of the Social Security Earnings Test on Hours of Work