THE OPEN UNIVERSITY OF TANZANIA
FACULTY OF BUSINESS MANAGEMENT
OLG 116: LABOR ECONOMICS
COURSE OUTLINE
COURSE LEADER:
Msafiri Njoroge
1.0. INTRODUCTION
Labour economics seeks to understand the functioning and dynamics of the markets for
labour. Labour markets function through the interaction of workers and employers. Labour
economics looks at the suppliers of labour services (workers), the demands of labour
services (employers), and attempts to understand the resulting pattern of wages,
employment, and income.
Labour economics course therefore is designed to study how labour markets work, using
microeconomic theoretical tools. It covers issues surrounding labour supply and demand,
competitive market equilibrium, labour market discrimination and effects of wage
differentials as well as various aspects of unemployment.
2.0. COURSE OBJECTIVES
The main objective of the course is to equip students with the basic knowledge and skills on the
functioning of labour markets. At the end of the course a students should be able to clearly
distinguish labour markets from other forms of markets such as product markets.
Specifically the course has the following objectives:
2.1 To examine the functioning of labour markets and compare it with other forms of markets
2.2 To examine the supply and demand for labour in competitive labour markets
2.3 To examine labour market equilibrium and wage determination
2.4 To explain key aspects of unemployment and underemployment and
2.5 To understand labour market discrimination and effects of wage differentials
3.0. COURSE CONTENTS
TOPIC ONE: INTRODUCTION TO LABOUR ECONOMICS
1.1
Definition and scope of labour economics.
1.2
The nature of labour markets
1.3
Derived Demands for Resources
1.4
Comparing labour markets with other forms of markets
TOPIC TWO: LABOUR SUPPLY
2.1
Definition of labour supply
2.2
The determinants of the elasticity of the labour supply curve
2.3
The backward bending supply curve:
•
Substitution effects and
•
Income effects
2.4
Short Run Labour Analysis
2.5
Calculations on labour supply
2.6
Labour supply estimations
TOPIC THREE: LABOUR DEMAND
3.1
Derived labour demand
3.2
The determinants of the elasticity of the demand for labour
3.3
Aspects of Factor Productivity: TPP, MPP, APP, TRP, MRP, ARP and VMPP
3.4
Demand in competitive labour markets
3.5
Demand in non competitive labour markets
TOPIC FOUR: EQUILIBRIUM WAGE DETERMINATION
4.1
Analyzing the interaction between labour demand and labour supply
4.2
Minimum Wage Effects
4.3
MRP theory and wage determination
4.4
Wage differentials in the labour market
4.5
Concept of sticky wages in the labour market
TOPIC FIVE: UNEMPLOYMENT AND UNDER-EMPLOYMENT
5.1
Meaning of unemployment
5.2
Types and theories on unemployment
5.3
Policies to reduce frictional unemployment
5.4
Under-employment
TOPIC SIX: STRATEGIC BEHAVIOR IN LABOUR MARKETS
6.1
Implicit Labour Contracts
6.2
Screening and Signaling
6.3
Efficiency Wages
TOPIC SEVEN: WAGE DIFFERENTIALS
7.1
Wage Differentials and Discrimination
7.2
Occupational Crowding
7.3
Decomposing Wage Differentials
7.4
Comparable Worth
7.5
Effects of Wages Discrimination
4.0. INDICATIVE READING RESOURCES
4.1
th
Byrns, Ralph. T and Stone Gerald. W (1995), Microeconomics (6 edition), HarperCollins
College Publishers, New York.
4.2
Cahuc, Pierre and André Zylberberg (2004), Labor Economics, MIT press
4.3 Ehrenberg R.G and Smith R.S (2012), Modern Labour Economics: Theory and Public
Policy (11th edition), Prentice Hall, New York.
rd
4.4
Sloman, J (2004), Essentials of Economics (3 edition), Prentice Hall. London
4.5
Various web-based sources