Labor and the Economy

Labor and the Economy provides the theory, empirical studies of the labor force, and public policies that flow from the theories and empirical studies in the field of labor economics. The book focuses on economic issues and debates. Topics discussed in the text include the history of labor economics; the microeconomic foundations of labor economics; the interaction between labor's effect on the macroeconomy and the macroeconomy's effect on labor; and the interrelation of trade unions with other economic institutions. Graduate and undergraduate students of economics as well as practicing economists will find the book a good reference material.

Contents

Preface

1. Labor and the Economy

Aims of the Book

Recent History of Labor Economics

Labor Economics after World War II: The High Wage Economy

The 1960s

The 1970s

Labor Economics Today

Plan of the Book

2. The Labor Force and the Economy

Labor Markets and the Economy

The Labor Force

Unemployment

Demographic Composition of the Labor Force

The Changing Structure of Employment in the American Economy

Union Membership

Summary

Part I Labor and the Microeconomy

A. Theory of Wages

3. Wage Theory: Labor Demand

Neoclassical Wage Theory: A First Glimpse

The General Nature of Labor Supply and Demand

Demand for Labor in the Firm: Initial Observations

Combining Labor with Capital: The Law of Diminishing Returns

The Marginal Product of Labor

The Firm's Demand for Labor: Technology and Product Markets

The Level of Employment in the Firm

The Marginal Revenue Products and Salaries of Professional Basketball Players

Wage Changes and Employment Changes: The Elasticity of Demand for Labor

Applications of the Elasticity of Labor Demand

Changes in the Demand for Labor

Summary

Study Questions

Further Reading

4. Wage Theory: Labor Supply

Labor Supply: Hours of Work

The Wage and Hours of Work

Labor Time Supplied to the Market by the Household

Income and Substitution Effects in the Household's Labor Supply Decision

Perspective on the Backward-Bending Supply Segment

Hours of Work in the American Economy

Elasticity of Labor Supply

Income Maintenance Experiments and Labor Supply

Labor Force Participation Rates

The Quality of Labor Supply: Human Capital

Summary

Study Questions

Further Reading

Appendix: The Income and Substitution Effects and Household Labor Supply

5. Wage Determination and Market Structure

Wage Determination in Perfectly Competitive Markets

The Cambridge Critique: Heterogeneity in the Labor Market

Wage Determination in a Perfectly Competitive Labor Market

Observation and Interpretation: Wage Determination in Perfect Competition

Imperfect Competition and Wage-Employment Determination

Oligopoly and Wage-Employment Determination

Monopsony and Wage-Employment Determination

Monopsony and the Minimum Wage

Market Structure and Wage-Employment Determination

Summary

Study Questions

Further Reading

6. Trade Unions and Wage Determination

Trade Union Membership in the United States

The Trade Union and Its Goals

Institutional Theory and Wage Determination

The Trade Union as an Economic Institution

Bargaining Model of Wage Determination

Collective Bargaining and Wage Determination

Summary

Study Questions

Further Reading

7. The Impact of Trade Unions on Wages

Methodological Problems

Wage Differentials for Union and Nonunion Workers over Time

The Impact of Trade Unions on Wages at a Fixed Point in Time

The Magnitude of Trade Union Impacts on Wages

The Spillover Effect and Pattern Bargaining

Summary

Study Questions

Further Reading

B. Labor Markets and Individual Incomes

8. Poverty and Inequality in the American economy

Poverty: Meaning and Measurement

Counting the Poor

The Incidence of Poverty

Critics of the Official Poverty Measure

Inequality in Income and Wealth

Some Observations on the Distribution of Wealth and Income

Summary

Study Questions

Further Reading

9. The Functional Distribution of Income

Labor and Capital Shares of the National Income

Income Inequality and the Functional Distribution of Income

Neoclassical Theory of the Functional Distribution of Income

The Elasticity of Substitution

Monopoly Power and the Functional Distribution of Income

The Functional Distribution of Income over the Business Cycle

Summary

Study Questions

Further Reading

10. Theory of Human Capital

Investment in Human Capital

Individual Investment in Human Capital

Human Capital Investment by the Firm

Public Investment in Human Capital

Investment in Human Capital and Individual Incomes

Summary

Study Questions

Further Reading

11. Labor Market Structures

Structural Perspective on Poverty and Inequality

The Relationship between Poverty and Work

The Structure of Labor Markets and the Working Poor

Employment at Low Wages

Dual Labor Markets and Poverty

Policy Implications of Labor Market Structure Theories

Summary

Study Questions

Further Reading

12. The Economics of Discrimination

Racial Inequalities

Sex Inequalities

Income Inequalities and Educational Inequalities

Theories of Discrimination

Public Policy and Economic Discrimination

Summary

Study Questions

Further Reading

Part II. Labor and the Macroeconomy

13. Unemployment: Meaning and Measurement

The Labor Force in the American Economy

Measuring Unemployment

Alternative Measures of Unemployment

Measuring the Severity of Unemployment

Unemployment Flows

Summary

Study Questions

Further Reading

14. Unemployment: Causes and Policy Responses

Neoclassical Theory of Unemployment

Job-Search Theories of Unemployment

The Natural Rate of Unemployment

Keynesian Aggregate Demand Theories of Unemployment

Theory of Structural Unemployment

Dual-Labor-Market Theory of Unemployment

Explanations of Unemployment: An Assessment

Summary

Study Questions

Further Reading

15. Inflation: Meaning and Measurement

Measuring Inflation

The Consumer Price Index since 1929

Inflation and Income Distribution

Inflation and the Standard of Living of the American Worker

Inflation, Productivity, and Unit Labor Costs

Critique of the Way Inflation Is Measured

Summary

Study Questions

Further Reading

16. Inflation: Causes and Policy Responses

Excess Demand Inflation

Cost-Push Inflation

The Phillips Curve: Inflation-Unemployment Trade-off

Summary

Study Questions

Further Reading

17. Stagflation

The Anatomy of Stagflation

Theory of Stagflation: Markup Pricing and Target Rates of Return

Stagflation and the Structure of the Labor Market

Expectations and Stagflation

Stagflation Policy

Summary

Study Questions

Further Reading

18. Wage-Price Policy

The Kennedy Guideposts

Nixon's New Economic Policy

The Carter Years

Wage-Price Policies in the 1980s

Lessons from Our Experience with Wage-Price Policies

Summary

Study Questions

Further Reading

Part III. Labor and Economic Institutions

19. The Evolution of American Unions

Institutional Premise of Neoclassical Marginal Productivity Theory

Prerevolutionary Conditions of Work

The Emerging Economy: Labor from the Revolution to the Civil War

The End of the Age of Innocence: Civil War to the American Federation of Labor

The Rise of Industrial Unionism: From 1900 to the Founding of the CIO

The Emergence of the CIO: 1935-1955

The Merged AFL-CIO: 1956 to the Present

The History of Work

Summary

Study Questions

Further Reading

20. Industrial Relations in the United States

The Nature of an Industrial Relations System

How Trade Unions Gain Recognition

The Collective Bargaining Process

The Content of Collective Bargaining Agreements

Summary

Study Questions

Further Reading

21. Industrial Relations Law

The Conspiracy Doctrine: 1806-1880

The Injunction: 1880-1930

Trade Unions and Congressional Antitrust Law

The New Deal Period

Taft-Hartley Act

Landrum-Griffin Act

Labor Law Reform

Summary

Study Questions

Further Reading

22. The Future of Industrial Relations

Concession Bargaining

Robotization

Unions and Investments of Pension Funds

Public Employee Unionization

The Davis-Bacon Act

Summary

Study Questions

Further Reading

Part IV. Labor and Public Policy

23. Minimum Wages

Minimum Wage Laws in the United States

Characteristics of Minimum Wage Workers

Wage Theory and Minimum Wages: Perfect Competition

Wage Theory and Minimum Wages: Monopsony

Minimum Wages and Youth Unemployment

Public Policy and the Minimum Wage: Youth Subminimum

Public Policy and the Minimum Wage: Indexation

Summary

Study Questions

Further Reading

24. Income Security, Health, and Safety

Social Security

Unemployment Compensation

Workers' Compensation

Black Lung Disease

Occupational Safety and Health Act

Summary

Study Questions

Further Reading

Index