Labor & Personnel Economics
FH Düsseldorf
2011-2012
Pablo Agnese
pablo.agnese@fh-duesseldorf.de
www.pabloagnese.com
(23.32 00.43)
Outline
• Unit 1: Introduction
• Unit 2: Definitions, facts, and trends
• Unit 3: The demand for labor
• Unit 4: The supply of labor
• Unit 5: The determination of wages
• Unit 6: Personnel Economics
Goals
• Different approaches / Philosophical background
• Some technical stuff 
• Some challenging discussions 
Literature
Main textbooks:
• McConnell, Brue, Macpherson
• Ehrenberg, Smith
• Kaufman, Hotchkiss
• Lazear, E., Personnel Economics in practice
Also:
• W. Block (Austrian School)
Grading
• Test (80%)
• Weekly practices (20%)
• Monitoring: email exchange and/or tutorials
• Unit 1: Introduction
• Unit 2: Definitions, facts, and trends
• Unit 3: The demand for labor
• Unit 4: The supply of labor
• Unit 5: The determination of wages
• Unit 6: Personnel Economics
1. Introduction
1.1 Why labor economics?
• Socioeconomic reason
• Quantitative reason
• Particular features (?)
1.2 Division of labor and comparative advantage
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Task specialization
Efficiency
Human capital and technological development
Price system
Negative effects?
1.3 Positive and normative economics
• Positive economics identifies two assumptions:
– Scarcity
– Rationality
• Normative economics looks at two types of transactions:
– Beneficial exchange (voluntary)
– Redistribution (involuntary)
• Intervention v. non-intervention
The labor market allows mutually beneficial
exchanges between employers and employees
Sometimes this might prove difficult
Market failures and / or government failures :
• Ignorance or lack of information
• Externalities
• Public goods
• Regulations
• Price distortion
1.3 Efficiency and Equality
• No single set of Pareto-efficient transactions
• “Social goal” What set is the most equitable?
• Decisions on equality  political matter
• Define a subjective standard of justice
• Economics is NOT a zero sum ​game!
Summary of 1st class
• Why labor economics?
• Division of labor and comparative advantages
• Positive and normative: role for government?
• Market failures: role for government?
• Efficiency and equality: role for government?
• Say’s law
We should ask then:
• Why should we specialize?
- E.g. Hunters and collectors
- People have different natural skills (sports, risky jobs)
- Education
- Cooperation
• What are the obstacles?
- Coordination
• How does the capitalist system solve these problems?
- Price system (commodities and labor!)
- Prices/wages  productivity of firms/disutility of work