劳动需求弹性估计课件

Chapter 5 Nonwage labor costsQuasi-fixed costs and their effects on demandn nDefinition of Quasi-fixed costNot strictly proportional to hours of workNonwagen nEffectsThe choice firms have between hiring more workers and employing those already on the payroll for longer hours.Nonwage labor costsNonwage labor costs include:n nhiring costs,Nonwage labor costsNonwage labor costs include:n nhiring costs,n ntraining costs,Nonwage labor costsNonwage labor costs include:n nhiring costs,n ntraining costs,n nemployee benefits.Hiring costsHiring costs include the costs associated with:n nplacing advertisements,Hiring costsHiring costs include the costs associated with:n nplacing advertisements,n nselecting candidates for interviews,Hiring costsHiring costs include the costs associated with:n nplacing advertisements,n nselecting candidates for interviews,n ninterviewing candidates,Hiring costsHiring costs include the costs associated with:n nplacing advertisements,n nselecting candidates for interviews,n ninterviewing candidates,n nselecting candidates for job offers,Hiring costsHiring costs include the costs associated with:n nplacing advertisements,n nselecting candidates for interviews,n ninterviewing candidates,n nselecting candidates for job offers,n nnegotiating job offers,Hiring costsHiring costs include the costs associated with:Hiring costs include the costs associated with:n nplacing advertisements,placing advertisements,n nselecting candidates for interviews,selecting candidates for interviews,n ninterviewing candidates,interviewing candidates,n nselecting candidates for job offers,selecting candidates for job offers,n nnegotiating job offers,and negotiating job offers,and n nprocessing the workers employment processing the workers employment(filling out(filling out W4 forms,I9 forms,and adding the worker to the W4 forms,I9 forms,and adding the worker to the companys insurance and pension plans)in the companys insurance and pension plans)in the human resources department of the firm.human resources department of the firm.Hiring costs differences across firmsn nIn the secondary labor market,hiring costs are generally relatively low.Hiring costs differences across firmsn nIn the secondary labor market,hiring costs are generally relatively low.n nHiring costs in the primary labor market,however,can be very substantial,particularly when a firm is operating in a national labor market.Training costsTraining costs include:n nthe explicit cost of hiring trainers and using materials(such as manuals,videotapes,and capital equipment)for training purposes,Training costsTraining costs include:n nthe explicit cost of hiring trainers and using materials(such as manuals,videotapes,and capital equipment)for training purposes,n nthe implicit cost of using other workers,raw materials,and capital during informal on-the-job training,Training costsTraining costs include:n nthe explicit cost of hiring trainers and using materials(such as manuals,videotapes,and capital equipment)for training purposes,n nthe implicit cost of using other workers,raw materials,and capital during informal on-the-job training,and n nthe opportunity cost of the trainees time during training.Training costs and wage offersn nlow wages-higher turnover rates and lower quality applicants,leading to higher training costs.Training costs and wage offersn nlow wages-higher turnover rates and lower quality applicants,leading to higher training costs.n nhigh wages-lower turnover rates and higher quality applicants,leading to lower training costsEmployee benefitsn nlegally mandated social insurance programs(such as social security and unemployment compensation),Employee benefitsn nlegally mandated social insurance programs(such as social security and unemployment compensation),andn nprivately provided benefits such as health insurance,vacation pay,and pension plans.Quasi-fixed costsn nQuasi-fixed costs are costs that vary with the number of workers hired by the firm,but not with hours worked per employee.Optimal mix of employment and hoursFirms may increase their use of labor by:n nadding additional workers,Optimal mix of employment and hoursFirms may increase their use of labor by:n nadding additional workers,n nincreasing the length of the workweek,Optimal mix of employment and hoursFirms may increase their use of labor by:n nadding additional workers,n nincreasing the length of the workweek,or n nsome combination of increases in hours and increases in the number of workers.Production functionQ=f(M,H)where:Q=quantity of outputM=number of workersH=length of average work weekProduction functionQ=f(M,H)where:Q=quantity of outputM=number of workersH=length of average work weekn nMP of M declines as M increasesProduction functionQ=f(M,H)where:Q=quantity of outputM=number of workersH=length of average work weekn nMP of M declines as M increasesn nMP of H declines as H increasesOptimal mix of M and H=MPHMEHMPMMEMWhere:MPM=marginal product of M MEM=marginal expense of M MPH=marginal product of H MEH=marginal expense of HEffect of an increase in mandated overtime premiumn nequivalent to an increase in MEH HEffect of an increase in mandated overtime premiumn nequivalent to an increase in MEH Hn nsubstitution effect:M increases and H decreasesEffect of an increase in mandated overtime premiumn nequivalent to an increase in MEH Hn nsubstitution effect:M increases and H decreasesn nscale effect:M and H both decrease Effect of an increase in mandated overtime premiumIn a more complete model,other effects would occur:n na substitution of capital and other inputs for labor,Effect of an increase in mandated overtime premiumIn a more complete model,other effects would occur:n na substitution of capital and other inputs for labor,n nincreased noncompliance,Effect of an increase in mandated overtime premiumIn a more complete model,other effects would occur:n na substitution of capital and other inputs for labor,n nincreased noncompliance,n nonly limited substitution of less skilled unemployed workers for the skilled workers who tend to work overtime hours,Effect of an increase in mandated overtime premiumIn a more complete model,other effects would occur:n na substitution of capital and other inputs for labor,n nincreased noncompliance,n nonly limited substitution of less skilled unemployed workers for the skilled workers who tend to work overtime hours,n nincreased moonlighting,Effect of an increase in mandated overtime premiumIn a more complete model,other effects would In a more complete model,other effects would occur:occur:n na substitution of capital and other inputs for a substitution of capital and other inputs for labor,labor,n nincreased noncompliance,increased noncompliance,n nonly limated substitution of less skilled only limated substitution of less skilled unemployed workers for the skilled workers unemployed workers for the skilled workers who tend to work overtime hours,who tend to work overtime hours,n nincreased moonlighting,and increased moonlighting,and n na decline in the base rate of compensation in a decline in the base rate of compensation in those industries that use significant amounts of those industries that use significant amounts of overtime.overtime.Part-time employment and mandated benefitsn nThe quasi-fixed costs associated with full-time employees is usually higher than the quasi-fixed costs associated with part-time employees.Part-time employment and mandated benefitsn nThe quasi-fixed costs associated with full-time employees is usually higher than the quasi-fixed costs associated with part-time employees.n nMandatory health insurance would reduce the use of part-time employment.Multi-period demand for laborn nfirms may lose money during a training period if they can receive a sufficient return on the training investment in subsequent periods.Present valuePresent valueThe present value of a future payment is lower when:the payment is received in the more-distant future,Present valueThe present value of a future payment is lower when:the payment is received in the more-distant future,and/or the interest rate is relatively high.Two period model:definitionsn nWo=wage during trainingWo=wage during trainingn nW1=post-training wageW1=post-training wagen nW*=wage if no training is received(the W*=wage if no training is received(the same in each period)same in each period)n nZ=hiring and training cost(paid during the Z=hiring and training cost(paid during the training period)training period)n nMPo=marginal product during trainingMPo=marginal product during trainingn nMP1=marginal product after trainingMP1=marginal product after trainingn nMP*=MP*=marginal product if no training is received marginal product if no training is received(assumed to be the same in each period)(assumed to be the same in each period)Shifts in MP due to trainingOptimal employment when training costs are presentn nPV(MRP)=PV(MFC)Optimal employment when training costs are presentn nPV(MRP)=PV(MFC)Definitions:n nPVP=MPo+MP1/(1+r),Optimal employment when training costs are presentn nPV(MRP)=PV(MFC)Definitions:n nPVP=MPo+MP1/(1+r),and n nPVE=Wo+Z+W1/(1+r).Optimal employment when training costs are presentn nPV(MRP)=PV(MFC)Definitions:n nPVP=MPo+MP1/(1+r),and n nPVE=Wo+Z+W1/(1+r).Optimal employment:n nPVP=PVEOptimal employment when training costs are presentn nPV(MRP)=PV(MFC)Definitions:n nPVP=MPo+MP1/(1+r),and n nPVE=Wo+Z+W1/(1+r).Optimal employment:n nPVP=PVEn nMPo+MP1/(1+r)=Wo+Z+W1/(1+r)Optimal employment when training costs are presentOptimal employment when training costs are presentn nWo+Z-MPo=(MP1-W1)/(1+r),Optimal employment when training costs are presentn nWo+Z-MPo=(MP1-W1)/(1+r),orn nNEo=GGeneral and firm-specific trainingn nGeneral training is training that raises a workers productivity in more than one firm.General and firm-specific trainingn nGeneral training is training that raises a workers productivity in more than one firm.n nFirm-specific training increases the workers productivity only in the current firm.Costs of general trainingn nSince general training raises the productivity of the worker in more than one firm,the costs(and benefits)of general training are expected to be borne by the worker.Costs of general trainingn nSince general training raises the productivity of the worker in more than one firm,the costs(and benefits)of general training are expected to be borne by the worker.n nWo=MPo-Z,andCosts of general trainingn nSince general training raises the productivity of the worker in more than one firm,the costs(and benefits)of general training are expected to be borne by the worker.n nWo=MPo-Z,andn nW1=MP1Costs of firm-specific trainingn nIf workers bear the costs,there is no reason for the firm to keep the worker.Costs of firm-specific trainingn nIf workers bear the costs,there is no reason for the firm to keep the worker.n nIf firms bear the costs,there is no reason for workers to stay.Costs of firm-specific trainingn nIf workers bear the costs,there is no reason for the firm to keep the worker.n nIf firms bear the costs,there is no reason for workers to stay.n nIt is expected that the costs of(and benefits from)firm-specific training will be shared.Costs of firm-specific trainingn nIf workers bear the costs,there is no reason for the firm to keep the worker.n nIf firms bear the costs,there is no reason for workers to stay.n nIt is expected that the costs of(and benefits from)firm-specific training will be shared.n nMPo-Z Wo MP*Costs of firm-specific trainingn nIf workers bear the costs,there is no reason for the firm to keep the worker.n nIf firms bear the costs,there is no reason for workers to stay.n nIt is expected that the costs of(and benefits from)firm-specific training will be shared.n nMPo-Z Wo MP*n nMP*W1 MP1Layoffs,productivity,and trainingn na firm will be more reluctant to lay off workers who have received training investments paid for by the firm,Layoffs,productivity,and trainingn na firm will be more reluctant to lay off workers who have received training investments paid for by the firm,n nfirms are more likely to rely on overtime rather than using additional employees in those markets in which firms pay a substantial share of training costs,Layoffs,productivity,and trainingn na firm will be more reluctant to lay off workers who have received training investments paid for by the firm,n nfirms are more likely to rely on overtime rather than using additional employees in those markets in which firms pay a substantial share of training costs,n nproductivity falls during a recession,Layoffs,productivity,and trainingn na firm will be more reluctant to lay off workers who have received training investments paid for by the firm,n nfirms are more likely to rely on overtime rather than using additional employees in those markets in which firms pay a substantial share of training costs,n nproductivity falls during a recession,andn nrises during an expansion.Minimum wage and training costsn nFor workers to bear part or all of the cost of their training,they must be paid less during the training period.Minimum wage and training costsn nFor workers to bear part or all of the cost of their training,they must be paid less during the training period.n nThe minimum wage sets a floor on this wage that limits the ability of workers to bear the costs of such training by accepting a lower wage.Minimum wage and training costsn nFor workers to bear part or all of the cost of For workers to bear part or all of the cost of their training,they must be paid less during the their training,they must be paid less during the training period.training period.n nThe minimum wage sets a floor on this wage The minimum wage sets a floor on this wage that limits the ability of workers to bear the that limits the ability of workers to bear the costs of such training by accepting a lower costs of such training by accepting a lower wage.wage.n nFirms faced with such a system may respond by Firms faced with such a system may respond by providing less training,thereby limiting the rate providing less training,thereby limiting the rate of growth of earnings for minimum-wage of growth of earnings for minimum-wage workers.workers.Credentials,Signals,and statistical discriminationn nFirms have imperfect information and may make decisions based on observable worker characteristics.Credentials,Signals,and statistical discriminationn nFirms have imperfect information and may make decisions based on observable worker characteristics.n nThis may lead to statistical discrimination.Credentials,Signals,and statistical discriminationn nFirms have imperfect information and may make decisions based on observable worker characteristics.n nThis may lead to statistical discrimination.n nStatistical discrimination is expected to be less severe when internal labor markets are used.