microeconomic theory labor markets

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1、CHAPTERSIXTEENLaborMarketsInthischapterweexaminesomeaspectsofinputpricingthatarerelatedparticularlytothelabormarket.Becausewehavealreadydiscussedquestionsaboutthedemandforlabor(oranyotherinput)insomedetailinChapter11,herewewillbeconcernedpri-marilywithanalyzingthesupplyoflabor.Westartbylo

2、okingatasimplemodelofutilitymaximizationthatexplainsindividuals’supplyofworkhourstothelabormarket.Subse-quentsectionsthentakeupvariousgeneralizationsofthismodel.AllocationOfTimeInPart2westudiedthewayinwhichanindividualchoosestoallocateafixedamountofincomeamongavarietyofavailablegoods.Indiv

3、idualsmustmakesimilarchoicesindecidinghowtheywillspendtheirtime.Thenumberofhoursinaday(orinayear)isabsolutelyfixed,andtimemustbeusedasit‘‘passesby.’’Giventhisfixedamountoftime,anyindividualmustdecidehowmanyhourstowork;howmanyhourstospendconsum-ingawidevarietyofgoods,rangingfromcarsandtelevi

4、sionsetstooperas;howmanyhourstodevotetoself-maintenance;andhowmanyhourstosleep.Byexamininghowindividualschoosetodividetheirtimeamongtheseactivities,economistsareabletounderstandthelaborsupplydecision.Simpletwo-goodmodelForsimplicitywestartbyassumingthereareonlytwousestowhichanindividualma

5、ydevotehisorhertime—eitherengaginginmarketworkatarealwagerateofwperhourornotworking.Weshallrefertononworktimeas‘‘leisure,’’butthiswordisnotmeanttocarryanyconnotationofidleness.Timenotspentinmarketworkcanbedevotedtoworkinthehome,toself-improvement,ortoconsumption(ittakestimetouseatelevi-1s

6、ionsetorabowlingball).Allofthoseactivitiescontributetoanindividual’swell-being,andtimewillbeallocatedtotheminwhatmightbeassumedtobeautility-maximizingway.Morespecifically,assumethatanindividual’sutilityduringatypicaldaydependsonconsumptionduringthatperiod(c)andonhoursofleisureenjoyed(h):ut

7、ility¼Uðc,hÞ:(16:1)Noticethatinwritingthisutilityfunctionwehaveusedtwo‘‘composite’’goods,con-sumptionandleisure.Ofcourse,utilityisactuallyderivedbydevotingrealincomeand1PerhapsthefirstformaltheoreticaltreatmentoftheallocationoftimewasgivenbyG.S.Beckerin‘‘ATheoryofthe