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25021 Labour Economics

UTS: Business: Finance and Economics
Credit points: 6 cp

Subject level: Undergraduate

Result Type: Grade and marks

Requisite(s): 25562 Economics of the Firm AND 25020 Applied Regression Analysis

Handbook description

This subject is designed to equip students with a set of analytical tools which can be used to study the behaviour on the labour markets and to analyse economic policy in the areas of employment and education. In the course of study students master economic concepts such as supply of and demand for labour, and learn how to use these concepts to critically evaluate policy proposals with respect to their impacts on wages and employment. Students also study key institutional features, historical trends and current policy issues in Australian labour markets.

Subject objectives/outcomes

On successful completion of this subject students should be able to:

  1. Use basic tools of economic analysis such as supply and demand to understand behaviour in labour markets.
  2. Understand sources of individual differences in wages and employment .
  3. Describe institutions and historical trends in Australian labour markets.
  4. Critically evaluate government policies with respect to their effects on wages and employment.

Contribution to graduate profile

Labour Economics gives students a thorough introduction to the functioning of modern labour markets, with a specific focus on the Australian context. The subject familiarizes students with economic concepts which can be used to rationalize firms' and workers' behaviour in the labour market, and to critically evaluate labour market policies. Students will learn how such concepts as supply of and demand for labour can be used to explain individual differences in wages and employment and to assess economic effects of minimum wage laws, payroll taxes, education subsidies, etc. Students will also become familiar with institutional features, historical trends and current policy issues in Australia in relationship to topics covered.

Teaching and learning strategies

The following teaching strategies will be employed: presentation of key concepts in lecture format, stimulating interactions between students and between students and lecturer during tutorials, in-class discussions of current issues in labour market policy in Australia.

Content

The subject examines the following topics:

  • The demand for labour: marginal revenue product of labour; labour demand in competitive markets in the long- and short-run; elasticity of labour demand
  • The supply of labour: trends in the labour force participation and hours of work in Australia; a theory of labour/leisure choice; labour supply elasticity; life-cycle labour supply
  • Labour market equilibrium: the wage and employment effects of employer payroll taxes, wage subsidies and minimum wages
  • Human capital: the model of human capital investment; the theory of signalling; effects of education on earnings; returns to education in Australia
  • empirical examination of a range of theories in economics and finance
  • Trade unions: Australia's industrial relations history; determinants of union membership; union goals, models of collective bargaining, the effects of unions on wages
  • Gender, race and ethnicity in the labour markets: theories of market discrimination; measuring discrimination; trends and sources of the gender pay gap in Australia
  • Unemployment: theories of unemployment; unemployment in Australia; effects of unemployment insurance

Assessment

Assessment item 1: Mid Semester Exam

Objective(s): 1, 2
Weighting: 30%
Task: The mid semester exam will assess students' knowledge of institutions and historical trends in Australian labour markets and the ability of students to use supply and demand principles to describe and understand key labour market features and behaviour. It will thus support objectives 1 and 2 above.

Assessment item 2: Assignment

Objective(s): 3. 4
Weighting: 20%
Task: This will provide students with an opportunity to explore and improve their understanding of sources of individual differences in wages and employment and/or to critically evaluate government policies with respect to their effects on wages and employment. It will thus support objectives 3 and 4.

Assessment item 3: Final Exam

Objective(s): 1, 2
Weighting: 50%
Task: The final exam will further assess students' abilities and understanding under objectives 3 and 4 above but will implicitly draw on knowledge and skills developed under objectives 1 and 2.