Questions tagged [labor-economics]

Labor economics is the branch of microeconomics that studies labor markets and its peculiarities. Labor economists usually study topics such as career choice, returns to schooling, determinants of labor productivity, wages, gender and racial gaps.

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what is the economic interpretation of result of the optimal problem

I have the following optimal control problem $$\max_{c_t} \int^{\infty}_0 e^{-p_it}\ln(c_t(i))dt$$ subject to $$\dot{w_t}(i)=rw_t(i) -n_ic_t(i)$$ $$w_0(i)=w_0>0$$ I have some wealthy and ...
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20 views

Value flow in economy - redefinition credit and money?

There are voices that there are already too much debt in the world (government, personal, government debt) and that can be the cause of the crisis. From the other hand the the only solution offered by ...
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1answer
41 views

How to test if the effect of one regressor entirely comes from other regressors?

I have a regression model that includes IQ test scores as the dependent variable; my own education, my father's education and my mother's education as independent variables. Suppose I want to know ...
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16 views

Total factor productivity persistence [closed]

Would it make a difference whether a decrease in total factor productivity z on the labor, goods, and money market is persistent? (That is, whether decreased productivity today also is predictive of ...
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33 views

Question on Human Capital Accumulation Model by Acemoglu/Autor

I was reading the lecture notes by Acemoglu and Autor on Labour Economics. https://economics.mit.edu/files/4689 I was able to understand equations 1.1 to 1.8 of the notes; however, I am unable to ...
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20 views

Would households rather live in a world with or without the unemployment insurance?

Would households rather live in a world with or without the unemployment insurance? What is a good example of world in which unemployment insurance is seen as a benefit, and not a hindrance?
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Overlapping Generations Model Pension System Question

Part 1 Pension System OLG Model with pension system: Each individual lives up to two periods. The surviving probability at period 2 is p. At period 1, the young household consumes c1, saves s1, and ...
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30 views

income effect and substitution effect

Question:Assume no non-labor income, Alice's labor supply function is $h(w) =\frac{w}{16}$. Her preferences are given by $u(c, l) =\sqrt{c}+3l$. When the wage rate increases, Alice's labor supply ...
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Does recycling lead to fewer jobs?

Say I buy a glass bottle, I can either put it in the landfill or recycle it. My understanding is, glass will breakdown into sand. (Not sure how well though, since we sometimes find glass from Roman ...
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2answers
90 views

The relationship between profit and wages

It seems obvious that an individual company increases their profits when they reduce wages or increase automation or some such. But if wages fell universally because of this, wouldn't that decrease ...
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20 views

Okun coefficient interpretation

I'm wondering how to interpret Okun’s coefficient. Say you have $y^c = -1*u^c$. This means that a 1% increase in the cyclical unemployment gap will produce a 1% decrease in the cyclical output gap. ...
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Why are there no minimum wage entry level IT jobs

In the UK, I have not seen any graduate level IT jobs offering a starting salary below £20,000. At the same time, about 10% of computer science graduates are unemployed six months after graduation. ...
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Are there any net benefits in reducing/increasing tourist-oriented retail business?

Hong Kong is currently experiencing a slump in foreign tourist-oriented retail sales. Shops selling jewellery, watches, infant formula or Chinese medicine experienced a 25-35% decline YoY in August. ...
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17 views

How do I adjust for heterogeneous labor markets when calculating the wage premium?

I have a dataset with mean and median wages for particular geographic areas around the United States. I am interested in calculating the wage premium between some areas. I can already do a simple ...
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21 views

Has contest theory ever been used to design real-world contests?

Contest theory, very much like auction theory, studies how people act in a contest and the properties of such a competition. There is a large literature that investigates different aspects of the ...
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1answer
56 views

Sign of income effect is ambiguous

When discussing the standard neoclassical model of labor supply, I have seen it is assumed that the sign of the income effect is ambiguous. Could anyone please explain this assumption, and more ...
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1answer
20 views

extensive vs intensive labor in US in recent decades

Total Hours worked is a mix of extensive (to work or not, the usual standard working week) and intensive (how many hours to work). I'm interested in how this balance of extensive and intensive ...
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1answer
37 views

Why does trade depress relative wages?

I've read that increased trade tends to decrease relative wages of labor. What is the intuition behind this? Lower wages in labor imply lower demand for workers, but doesn't trade just encourage ...
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15 views

Is it just as profitable for a brokerage to service investments in 401k plans as opposed IRAs?

Why would a brokerage charge fees to the employer, if they could just charge fees to the individual, like they would do otherwise? If an employer wouldn't want to spend any extra money on 401k plans, ...
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10 views

what is the methods to check the impact of regulation on gender pay gap

i have a data for for the top 5 manager of 100 companies from 2010-2018 and i want to check the impact of a regulation that limits the max salary of managers in the financial sector on the gender pay ...
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16 views

One Treated Unit That Becomes Untreated

Suppose I have a set of units $n_i, i = 1,...,N$. One unit was receiving a treatment $n_j = 1$ at times $t=1$ to $t=\tau$. All other units never received the treatment so $\forall t, n_i=0,i\neq j$. ...
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2answers
42 views

regression method for data that contain a number of observation for several years

I have a data set about 125 companies. For each company I have the salary and some other variables about the top 5 managers in each company. One observation contains the top 5 managers in each one of ...
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1answer
24 views

Name of phenomenon where migrant workers receive decent wage but absolutely no chance of getting any government benefits

Not sure if the title reflects the question very accurately but my question is specific to the Gulf countries which have a huge population of migrant workers, like Saudi and UAE. So, let's say Raj is ...
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1answer
104 views

Could a “Japanese-style strike” work as it's supposed to? Under what conditions?

This is an urban legend, mostly believed in Spain and some countries in South America. The legend is based on the premise that their way to make a strike would be to work much more than usual in some ...
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48 views

What is the trade-off between? Consumption and Leisure or Income and Leisure?

When first presenting the utility function and its arguments, textbooks typically start by stating that utility is a function of consumption and leisure. See for example https://sites.hks.harvard.edu/...
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49 views

Change in the marginal utility of leisure with respect to a change in consumption

I am reading a paper that derives a theoretical retirement model. There is a utility function and a budget constraint forming an optimal control problem. The solution to this problem states that \...
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11 views

How is matching theory used in context of Marriage market difference in terms of which is used in context of labour and housing market?

I am looking for an overview as most of the introduction to matching talks about the work done in the Marriage market, Job Matching which is axiomatic. Then while looking at Labour and housing market ...
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1answer
25 views

Has there been an applications of search and matching theory in the Neoclassical Growth Model?

Specifically, I am looking for the standard neoclassical growth model, but the labour decision is based on either search or matching theory instead of a Walrasian labour mechanism.
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1answer
47 views

How are you supposed to calculate overhead expenses?

I'm doing a college assignment (creating a software product) in Computer Science and have been given a template for the part of the report about economics. At one moment it states the following: <...
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1answer
23 views

Is it better for low-income people to live in the countryside where it's cheap or in the city where there are more services?

Supposing someone is struggling to pay the rent in an urban area, and they don't have anything tying them down to any one place, would it make sense to move to a rural area where the rent is much ...
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46 views

Immigration supply shocks, fixed effects and model interpretation

I'm new to this and I've been racking my brains for a couple days trying to understand this model and how to run it in Stata. More than programming help, I think I just don't understand the model well ...
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1answer
43 views

Does migration exacerbate (albeit delay) the problem of aging, economically-inactive populations in Western societies?

As a layman, I've always understood that there is a general consensus amongst economists that "immigration is economically beneficial" to rich Western countries (like Britain) who have aging ...
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36 views

Asymmetric Nash Bargaining

The Nash bargaining solution selects the unique solution to the maximization problem $\max_{s_1, s_2 } (s_1 - d_1) (s_2 - d_2)$ such that the solution satisfy the following axioms : Invariance ...
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1answer
23 views

How exactly does removing labor​ market rigidities reduce structural unemployment and increase potential output in an economy?

Here I want to focus primarily on the potential benefits of labor market reforms such as a reduction in job security and trade union power and not their controversies. I wish to learn a few thoroughly ...
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1answer
150 views

Maximization problem FOC and Euler equation

Can someone please help me with the Lagragian and the derivation of the following objective function ? Beneath I provide the objective function, the constraint and the Euler equation that results from ...
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1answer
35 views

Looking for help with Solow Model Question [closed]

The question is this: Suppose there is a production function of $Q=F(K, L)=\sqrt{K}\sqrt{L}$. Suppose that MPC=0.8 and the labor force is growing at a rate of 0.05 per year. Also labor force ...
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1answer
57 views

Search and matching model: effect of hiring cost on wage curve

What effect does the hiring cost have on the wage bargaining outcome (wage curve)? In Cahuc, Carcillo, and Zylberberg: Labor Economics, they derive the following wage curve: $$w = z + (y-z) \frac{\...
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10 views

Have any economics papers used unified cure models?

Does anyone know if there are unified cure models (aka split population models) in time-until-employment studies that combine the mixture cure approach with the promotion time approach as described in ...
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1answer
38 views

DMP Search Model - Terminology

In the most basic Diamond-Mortensen-Pissarides (DMP) model we have the variable $V$ which represents the present discounted value of expected profits from a vacant job. The corresponding Bellman ...
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1answer
25 views

How to account income from the informal sector?

Some context here. I'm from India and over here around 80% of the public work in the informal unaccounted sector. Yesterday, the main opposition party said that if they're elected, they'd compensate ...
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1answer
70 views

Does brain drain really affect a nation's growth trajectory?

Take India as an example. India has been losing most of its bright minds to the west. India also ranks low in development. I would like to get a definitive answer to this cause-effect type question. ...
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35 views

What would the production function look like if MPN (marginal product of labor) were constant, rising and declining?

I know this is a macroeconomic topic and I believe I understand the what the graph for the production function (with Y, Real GDP, and N, labor on the axis) would look like if the MPN were constant and ...
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3answers
329 views

Cobb-Douglas production function, given $w$ get $r$ regardless of input levels. Why?

There is a market economy with technology given by: $$Y = K^\alpha L^{1-\alpha} \tag{1}$$ Firms behave competitively and input prices are: $$r = \alpha K^{\alpha-1}L^{1-\alpha} = \alpha(\frac{L}{K})...
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1answer
50 views

Factor-augmenting technologies (Acemoglu and Restrepo 2018c)

In that paper, they consider the following production function: $Y = F(A_KK,A_LL)$. Where: K denotes capital, L is labor, and $A_K$ and $A_L$ denote capital-augmenting and labor-augmenting ...
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How is labor demand measured?

For instance, in the introduction of this paper (first paragraph), talking about Figure 1, they say that labor demand is measured as the real wage bill normalized by population. Is it common to ...
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1answer
57 views

What is the relation between the trade deficit and the outsourcing of jobs?

To make it easier, let's imagine USA exports nothing and imports nothing (or the exports have the same value with the imports = 0 trade deficit = the country exports the same amount of jobs as it is ...
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1answer
68 views

Elasticity of substitution between leisure in two periods

This is a basic question, but I am new to macro models. The question is from Romer's text. Assume a household only has one member and has no initial wealth, and the household lives for two periods. ...
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1answer
37 views

Is there any reliable data on what % of the UK population currently earn less than £17,300 annually?

According to the Living Wage Foundation the "real living wage" in the UK is £9 an hour Which assuming a 37 hour week & rounding to the nearest whole GBP amounts to £17,375 Formula used ((9*37)/...
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3answers
154 views

Reference request: Gender wage gap / Minority wage gap

Disclaimer: I am neither a social scientist nor an economist. I hope the ESE is the right place to ask this question. Disclaimer 2: I do not intend to spark an ideologically driven discussion here. ...
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0answers
77 views

What predictions do economic models make for an economy where 50% of the population earn less than the cost of living? [closed]

These are the admittedly somewhat disparate pieces of information gleaned from separate sources that the question arose from. According to The living wage foundation the real cost of living in ...