1、INSTRUCTORS MANUALto accompanyEhrenberg & SmithModern Labor Economics: Theory & Public PolicyEighth EditionRobert S. SmithCornell UniversityRobert M. WhaplesWake Forest UniversityLawrence WohlGustavus Adolphus UniversityCopyright 2003 Addison-Wesley, Inc.All rights reserved. Printed in the United St
2、ates of America. No part of this book may be used or reproduced in any manner whatsoever without written permission from the publisher, except testing materials and transparency masters may be copied for classroom use. For information, address Addison-Wesley Higher Education, Pearson PLC 75 Arlingto
3、n Street, Suite 300, Boston, Massachusetts 02116.A NOTE TO THE INSTRUCTORThis Instructors Manual is intended to summarize the content of the eighth edition of Modern Labor Economics: Theory and Public Policy in a way that explains our pedagogical strategy. Summarized briefly, we believe that labor e
4、conomics can be best learned if students are (1) able to see the big picture early on, so that new concepts can be placed in perspective; (2) moved carefully from concepts they already know to new ones; (3) motivated by seeing the policy implications or inherently interesting insights generated by t
5、he concepts being taught. To this last end, we discuss policy issues in every chapter and, in addition, employ boxed examples to demonstrate in historical, cross-cultural, or applied managerial settings the power of the concepts introduced.The text is designed to be accessible to students with limit
6、ed backgrounds in economics. We do employ graphic analyses and equations as learning aids in various chapters; however, we are careful to precede their use with verbal explanations of the analyses and to introduce these aids in a step-by-step fashion. To help students in the application of concepts
7、to various issues, we have printed answers to the odd-numbered review questions for each chapter at the back of the book.We have also endeavored to put together a text that, while accessible to all, is a comprehensive and up-to-date survey of modern labor economics. There are 9 chapter appendices de
8、signed to be used with more advanced students in generating additional insights.In the first part of this Instructors Manual, we present a brief overview and the general plan of Modern Labor Economics. We then present a chapter-by-chapter review of the concepts presented in the text. In the discussi
9、on of each chapter we list the major concepts or understandings covered, and in some cases suggest topics or sections that could be eliminated if time must be conserved. We also present our answers to the even-numbered review questions at the end of each chapter.An important part of this Instructors
10、 Manual are the suggested essay questions related to each chapter. We present a few suggested essay questions for each chapter.Table of ContentsClick on the chapter title to jump directly to that page.Overview of the Text1Chapter 1 Introduction4Chapter 2 Overview of the Labor Market8Chapter 3 The De
11、mand for Labor14Chapter 4 Labor Demand Elasticities20Chapter 5 Quasi-Fixed Labor Costs and Their Effects on Demand26Chapter 6 Supply of Labor to the Economy: The Decision to Work32Chapter 7 Labor Supply: Household Production, the Family, and the Life Cycle37Chapter 8 Compensating Wage Differentials
12、and Labor Markets45Chapter 9 Investments in Human Capital: Education and Training51Chapter 10 Worker Mobility: Migration, Immigration, and Turnover57Chapter 11 Pay and Productivity62Chapter 12 Gender, Race, and Ethnicity in the Labor Market68Chapter 13 Unions and the Labor Market77Chapter 14 Inequal
13、ity in Earnings84Chapter 15 Unemployment88OVERVIEW OF THE TEXTINTRODUCTION/REVIEW: Chapters 1 and 2Chapter 1 - IntroductionAppendix 1A - Statistical Testing of Labor Market HypothesesChapter 2 - Overview of the Labor MarketChapters 1 and 2 introduce basic concepts of labor economics. They are writte
14、n to be accessible to students without backgrounds in intermediate theory, and can, therefore, be used as building blocks when a professor must begin at the beginning. If the course is being taught to economics majors with intermediate microeconomics as a prerequisite, these chapters may be skipped
15、or skimmed quickly as a review.An appendix to Chapter 1 introduces the student to econometrics. The purpose of this appendix is to present enough of the basic econometric concepts and issues to permit students to read papers employing ordinary least squares regression techniques. We strongly recomme
16、nd assigning Appendix 1A in courses requiring students to read empirical papers in the field. We also recommend (in footnote 3 of the appendix) an introductory econometrics text that could be assigned by instructors who wish to go beyond our introductory treatment.THE DEMAND FOR LABOR: Chapters 3-5C
17、hapter 3 - The Demand for LaborAppendix 3A - Graphic Derivation of a Firms Labor Demand CurveChapter 4 - Labor Demand ElasticitiesAppendix 4A - International Trade and the Demand for Labor: Can High-Wage Countries Compete?Chapter 5 - Quasi-Fixed Labor Costs and Their Effects on DemandThe demand for
18、labor is discussed first primarily because we believe that the supply of labor is a more complex topic in many ways. Before analyzing the labor/leisure choice and household production, we first introduce students to the employer side of the market. For instructors who desire to cover topics concerne
19、d with the decision to work first, however, we note that Chapters 6 and 7, which deals with that decision, are self-contained. Therefore, nothing would be lost if Chapters 6 and 7 were taught ahead of Chapters 3, 4, and 5.In Chapter 3 the principal question analyzed is why demand curves slope downwa
20、rd. In Chapter 4 we move to a discussion of the elasticity of demand, and analyze the determinants of the precise relationship between wages and employment. The concepts are used to analyze how technological change and foreign trade affect labor demand. Finally, Chapter 5 analyzes the quasi-fixed na
21、ture of many labor costs and the ways these costs affect the demand for labor.SUPPLY OF LABOR TO THE ECONOMY: Chapters 6 and 7Chapter 6 - Supply of Labor to the Economy: The Decision to WorkChapter 7 - Labor Supply: Household Production, the Family, and the Life CycleChapters 6 and 7 analyze the dec
22、ision of an individual to work for pay. The traditional analysis of the labor/leisure choice is given in Chapter 6, while in Chapter 7 the decision to work for pay is placed in the context of household production. The essential features of the decision to work for pay are included in Chapter 6. In o
23、ne-quarter courses or courses in which time is scarce, Chapter 7 could be skipped; however, doing so would eliminate analyses of family labor supply decisions as well as labor supply decisions in the context of the life cycle.As noted above, Chapters 6 and 7 are designed to be self-contained for the
24、 convenience of instructors who wish to teach labor supply ahead of labor demand.FACTORS AFFECTING THE CHOICE OF EMPLOYMENT: Chapters 8-10Chapter 8 - Compensating Wage Differentials and Labor MarketsAppendix 8A - Compensating Wage Differentials and LayoffsChapter 9 - Investments in Human Capital: Ed
25、ucation and TrainingAppendix 9A - A Cobweb” Model of Labor Market AdjustmentAppendix 9B - A Hedonic Model of Earnings and Educational LevelChapter 10 - Worker Mobility: Migration, Immigration, and TurnoverOnce they have decided to seek employment, prospective workers encounter important choices conc
26、erning their occupation and industry, as well as the general location of their employment. Chapters 8 through 10 analyze these choices, with Chapters 8 and 9 focusing on industry/occupational choice and Chapter 10 on the choice of a specific employer and the location of employment. More particularly
27、 Chapter 8 presents an analysis of job choice within the context of jobs that differ along nonpecuniary dimensions. Chapters 9 and 10 analyze issues affecting worker investments in skill acquisition (Chapter 9) and job change (Chapter 10), and both employ the concepts of human capital theory. All t
28、hree chapters contain appendices of interest to instructors who wish to teach more advanced material.ANALYSES OF SPECIAL TOPICS IN LABOR ECONOMICS: Chapters 11-15Chapter 11 - Pay and ProductivityChapter 12 - Gender, Race, and Ethnicity in the Labor MarketAppendix 12A - Estimating Comparable Worth Ea
29、rnings Gaps: AnApplication of Regression AnalysisChapter 13 - Unions and the Labor MarketAppendix 13A - Arbitration and the Bargaining Contract ZoneChapter 14 - Inequality in EarningsAppendix 14A - Lorenz Curves and Gini CoefficientsChapter 15 - UnemploymentHaving presented basic concepts and analyt
30、ical tools necessary to understand the demand and supply sides of the labor market, we now move to analyses of special topics: compensation, discrimination, unions, inequality, and unemployment. A complete analysis of all these topics requires an understanding of behavior on both the demand and supp
31、ly sides of the market, and these chapters are built upon the preceding ten. No new analytical tools are introduced in these chapters.The chapters on unionism (Chapter 13) and discrimination (Chapter 12) deal with issues typically covered in labor economics courses, but they are more comprehensive t
32、han most other texts. It should be noted that the appendix to Chapter 12 includes an application of regression analysis. The chapter on inequality is unique and can be skipped without a loss in coverage of conventional material; however, it is written in a way that provides a review of material in p
33、revious chapters.CHAPTER 1 - INTRODUCTIONBecause the textbook stresses economic analysis as it applies to the labor market, students must understand the ways economic analyses are used. The basic purpose of Chapter 1 is to introduce students to the two major modes of economic analysis: positive and
34、normative. Because both modes of analysis rest on some very fundamental assumptions, Chapter 1 discusses the bases of each mode in some detail.In our treatment of positive economics, the concept of rationality is defined and discussed, as is the underlying concept of scarcity. There is, in addition,
35、 a lengthy discussion of what an economic model is, and an example of the behavioral predictions flowing from such a model is presented. The discussion of normative economics emphasizes its philosophical underpinnings and includes a discussion of the conditions under which a market would fail to pro
36、duce results consistent with the normative criteria. Labor market examples of governmental remedies are provided.The appendix to Chapter 1 introduces the student to ordinary least squares regression analysis. It begins with univariate analysis, introduced in a graphical context, explaining the conce
37、pts of dependent and independent variables, the intercept and slope parameters, the error term, and the t statistic. The analysis then moves to multivariate analysis and the problem of omitted variables.List of Major Concepts1.The essential features of a market include the facilitation of contact be
38、tween buyers and sellers, the exchange of information, and the execution of contracts.2.The uniqueness of labor services affects the characteristics of the labor market.3.Positive economics is the study of economic behavior, and underlying this theory of behavior are the basic assumptions of scarcit
39、y and rationality.4.Normative economics is the study of what should be, and theories of social optimality are based in part on the underlying philosophical principle of mutual benefit. 5.A market fails when it does not permit all mutually beneficial trades to take place, and there are three common r
40、easons for such failure.6.A governmental policy is Pareto-improving if it encourages additional mutually beneficial transactions. At times, though, the goal of improving Pareto efficiency conflicts with one of generating more equity.7.The concept that governmental intervention in a market may be jus
41、tified on grounds other than the principle of mutual benefit is discussed (for example, government intervention may be justified on the grounds that income redistribution is a desirable social objective).8.(Appendix) The relationship between two economic variables (e.g., wages and quit rates) can be
42、 plotted graphically; this visual relationship can also be summarized algebraically.9.(Appendix) A way to summarize a linear relationship between two variables is through ordinary least squares regression analysis - a procedure that plots the best line (the one that minimizes the sum of squared devi
43、ations) through the various data points. The parameters describing this line are estimated, and the uncertainty surrounding these estimates are summarized by the standard error of the estimate.10.(Appendix) Multivariate procedures for summarizing the relationship between a dependent and two or more
44、independent variables is a generalization of the univariate procedure, and each coefficient can be interpreted as the effect on the dependent variable of a one-unit change in the relevant independent variable, holding the other variables constant.11. (Appendix) If an independent variable that should
45、 be in an estimating equation is left out, estimates of the other coefficients may be biased away from their true values.Answers to Even-Numbered Review Questions2.Are the following statements positive or normative? Why?a.Employers should not be required to offer pensions to their employees.b.Employ
46、ers offering pension benefits will pay lower wages than they would if they did not offer a pension program.c.If further immigration of unskilled foreigners is prevented, the wages of unskilled immigrants already here will rise.d.The military draft compels people to engage in a transaction they would
47、 not voluntarily enter into; it should therefore be avoided as a way of recruiting military personnel.e.If the military draft were reinstituted, military salaries would probably fall.Answer: (a) normative (b) positive (c) positive (d) normative (e) positive4.What are the functions and limitations of
48、 an economic model?Answer: The major function of an economic model is to strip away real world complexities and focus on a particular cause/effect relationship. In this sense an economic model is analogous to an architects model of a building. An architect may be interested in designing a building that fits
