Bài giảng Labour Market Economics - Chapter 6 Labour Demand, NonWage Benefits, and Quasi-Fixed Costs

Chapter SixLabour Demand,NonWage Benefits, and Quasi-Fixed Costs Created by: Erica Morrill, M.Ed Fanshawe College1© 2002 McGraw-Hill Ryerson Ltd.Chapter FocusNonwage benefits Hours of labour Payroll taxes Labour decisions in economic downturnsCreating more jobs2© 2002 McGraw-Hill Ryerson Ltd.Figure 6.1 Components of Total CompensationTotal CompensationNonwage Benefits(supplementary labour income)Wages and SalariesPay for Time WorkedPay for Time Not Worked3© 2002 McGraw-Hill Ryerson Ltd.Quasi-Fixed Labour CostsIndependent of the number of hours workedArise from:hiring coststraining costsdismissal costsnonwage benefits4© 2002 McGraw-Hill Ryerson Ltd.Quasi-Fixed CostsImpact the employer's decisions on:work schedulespart-time workovertime workhiring and Layoff decisionsunemployment5© 2002 McGraw-Hill Ryerson Ltd.Nonwage Benefits and Total CompensationFastest growing components pensionlegally required payments6© 2002 McGraw-Hill Ryerson Ltd.Nonwage Benefits vs. WagesWhy wouldn’t employees prefer wages over nonwage benefits?generally not taxedeconomies of scale for group purchasesPerception that they are freeease of purchase7© 2002 McGraw-Hill Ryerson Ltd.Nonwage Benefits vs. WagesEmployer’s benefits planning of production processreduce need for contingency plans for layoffs and accidentsalter employee behaviour in favor of productionreduce turnover8© 2002 McGraw-Hill Ryerson Ltd.Nonwage Benefits vs. WagesGovernment’s benefitreduce pressure for government expenditures public pension plansunemployment insuranceincrease social security9© 2002 McGraw-Hill Ryerson Ltd.Quasi-Fixed Labour CostsVariable Labour costsvary with hours Quasi-fixedincurred per employee independent of hours10© 2002 McGraw-Hill Ryerson Ltd.Quasi-Fixed Labour CostsRecurring payroll taxesNonrecurringhiring and orienting new employeesdismissing employees11© 2002 McGraw-Hill Ryerson Ltd.Quasi-Fixed Labour CostsGiven the quasi-fixed costs:firm is no longer indifferent in the way to increase labour inputincreasing the number of employees becomes more costly12© 2002 McGraw-Hill Ryerson Ltd.Quasi-Fixed CostsFirms try to: amortize these costs encourage additional hours rather than hire employees13© 2002 McGraw-Hill Ryerson Ltd.General Effect of Quasi-Fixed Costs the MC of hiring an additional worker relative to MC of working an existing worker longer hoursDiscourage labour expansion away from employment and toward working more hoursHiring continues until the present value of additional future revenues = the present value of additional costs14© 2002 McGraw-Hill Ryerson Ltd.H+T+ Nt=0Wt(1+r)t= t=0NVMPt(1+r)t6.1  Nt=0(1+r)t> t=0N Wt(1+r)tVMPt6.2Profit-Maximizing Employment Rule15© 2002 McGraw-Hill Ryerson Ltd.Phenomena Explained by Fixed CostsOvertimeTemporary help agenciesLayoffsSegmentation of labour marketsResistance to worksharing16© 2002 McGraw-Hill Ryerson Ltd.Figure 6.2 (a)  Nonrecurring fixed Employment Costs and Changes in Labour DemandNo fixed costsWN*0W0NVMPN10VMP117© 2002 McGraw-Hill Ryerson Ltd.Figure 6.2(b)  Nonrecurring fixed Employment Costs and Changes in Labour DemandFixed costsWN*0W0NVMPVMP1N0VMP0VMP - (H+T)“Buffer”18© 2002 McGraw-Hill Ryerson Ltd.Job CreationWorksharingPart-time workOvertime restrictions19© 2002 McGraw-Hill Ryerson Ltd.Reducing Barriers to Employment SharingPremiums based on hourly earnings with a ceiling based on hourly earningsProrating contributions according to hours workedSubsidizing employment sharing20© 2002 McGraw-Hill Ryerson Ltd.End of Chapter SixChapter 6-21© 2002 McGraw-Hill Ryerson Ltd.