U09071 Dr. Stanley Fong Lecture 7: 26 July 2006
Lecture Lecture 7: 7: Analyses Analyses of of labour labour market market behaviour behaviour Migration and unemployment Discrimination in labour markets
Migration Migration and and unemployment unemployment Types of mobility Type of mobility
Same
Different
I
III
Different
Occupation
Same
II
IV
Migration Migration and and unemployment unemployment Types of mobility I II III IV
Job change/no change in occupation or residence Occupational change/no change in residence Geographic change/no change in occupations Geographic change/change in occupations
The The simple simple classical classical approach approach to to migration migration Differences in wages are the main cause of migration Local labour markets are well-behaved so that real wages can adjust quickly and freely to eradicate excess demand/supply. Changes in labour demand will generate price signals in the form of real wage changes.
The The simple simple classical classical approach approach to to migration migration A positive shock to a real labour demand will, by raising real wages, have three main effect: existing workers will supply additional labour; the participation rate may be expected to rise for the same reason; and will produce incentives to migrate into the area in question.
The The determinants determinants of of migration migration Age Family factor Education Distance Unemployment rates Other factors
The The determinants determinants of of migration migration Age All else being equal, the older that a person is, the less likely he or she is to migrate. Older migrants have fewer years to recoup their investment costs. Older people tend to have higher levels of human capital that are specific to their present employers.
The The determinants determinants of of migration migration Age The cost of moving is a consideration affecting migration. The inverse relationship between age and migration exists partially because people are most mobile after completing lengthy investments in human capital.
The The determinants determinants of of migration migration Family factor The potential costs of migrating multiply as family size increases. unmarried persons are more likely to move; the wife’s employment inhibits family migration; the longer the wife’s tenure, the less likely a family will migrate; and
The The determinants determinants of of migration migration Family factor the presence of school-age children in the family reduces migration.
The The determinants determinants of of migration migration Education The higher one educational attainment, all else being equal, the more likely it is that one will migrate. College graduates and those with postgraduate training search for employment in regional and national labor markets in which employers seek qualified employees.
The The determinants determinants of of migration migration Education The wide disparities of pay for professional and managerial employees provide more opportunity to move to jobs entailing greater responsibility and pay.
The The determinants determinants of of migration migration Education College-educated workers are more apt to get transferred to new geographic locations and, if not transferred, are more likely than those with fewer years of schooling to have new jobs already in place upon migrating. People who have college degrees may attach fewer psychic costs to leaving their hometowns.
The The determinants determinants of of migration migration Distance The probability of migrating varies inversely with the distance a person must move. the greater the distance, the less information a potential migrant is likely to possess about the job opportunities available.
The The determinants determinants of of migration migration Distance transportation costs usually increase with distance. the longer the physical distance of the move, the more probable it is that psychic costs will be substantial.
The The determinants determinants of of migration migration Unemployment rates High unemployment rates in an “origin” location should increase the net benefits from migrating and push workers away. Families headed by unemployed persons are more likely to migrate than others, and
The The determinants determinants of of migration migration Unemployment rates the rate of unemployment at the origin positively affects out-migration.
The The determinants determinants of of migration migration Other factors Home ownership deters migration. Occupational licensure reduces migration by impeding the flow of licensed practitioners among states having differing licensing requirements. State and local government policies may influence labor migration.
The The determinants determinants of of migration migration Migration may be undertaken for one or more of the following reasons: to increase expected lifetime earnings his may be because relocation is essential to retain one's position in a firm's internal labour market); to improve housing conditions;
The The determinants determinants of of migration migration to release housing equity; to enjoy a more agreeable climate/environment; to relocate where school standards are higher; or to improve social networks.
Discrimination Discrimination in in labour labour markets markets Labor market discrimination can manifest itself in many ways: At the hiring stage, employers may prefer not to hire persons of a particular group or they may insist on higher qualifications for members of this group. Employers may not promote members of a certain group to better-paying positions.
Discrimination Discrimination in in labour labour markets markets Employers may pay lower wages to persons in a particular group, even though their qualifications are the same and the work they perform is equal to that of other workers. Consumers may exercise labor market discrimination in their refusal, for ex-ample, to purchase the services of particular persons simply because of their gender, ethnic background, or race.
Discrimination Discrimination in in labour labour markets markets Fellow workers may practice labor market discrimination by their unwillingness to work alongside other workers simply because they happen to be members of a certain group.
Discrimination Discrimination in in labour labour markets markets Discrimination on the basis of any characteristic: Gender Racial and ethnic Age Disability Religion Accent Hair color Others
Discrimination Discrimination in in labour labour markets markets Theories of labor market discrimination Why does discrimination exist? Who gains and who loses from discrimination? What kinds of policies are best suited to eliminate labor market discrimination?
Theories Theories of of labor labor market market discrimination discrimination Personal prejudice theory (Gary Becker) An individual with a propensity to discriminate against members of a certain group can be said to have a “taste for discrimination” (or, simply, a prejudice).
Theories Theories of of labor labor market market discrimination discrimination Personal prejudice theory (Gary Becker) Implies that employers who indulge in their discriminatory tastes are not profit maximizers.
Theories Theories of of labor labor market market discrimination discrimination Personal prejudice theory (Gary Becker) Three major sources of personal prejudice discrimi-nation are working in labor markets: employers; employees; and consumers.
Theories Theories of of labor labor market market discrimination discrimination Statistical Discrimination Does not provide a reason for employers, employees, and consumers to discriminate. Results from imperfect information.
Theories Theories of of labor labor market market discrimination discrimination Statistical Discrimination Employers usually don’t have complete information about applicants. Can’t judge for certain how well particular individuals will work out if hired. Try to use signals to help them in their hiring decisions
Theories Theories of of labor labor market market discrimination discrimination Statistical Discrimination Individual signals (based on individual performance): college degree, his or her grade point average, and letters of recommendation). Other signals (based on the average characteristics of the group): “stereotypes.” Statistical discrimination or “unfair stereotyping” arises.
Thank you