ECON 139 set 5(7 pages)
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ECON 139 set 5
ECON 139 week 5 notes
- Lecture number:
- Lecture Note
- University of California, San Diego
- Econ 139 - Labor Economics
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April 28, 2015 Lessons 1. It doesn’t matter if the taxes are imposed on workers or employers—the impact is the same: higher labor costs, lower takehome pay and lower employment. 2. If the elasticity of labor demand is greater than the elasticity of labor supply, then the burden of the tax falls primarily on workers. (shown above) 3. If the elasticity of labor supply is greater than the elasticity of labor demand, then the burden of the tax falls primarily on firms. (not shown) Mandated Benefits • The government occasionally mandates that employers provide certain benefits to their workers. – Mandated maternity leave – Mandated health benefits • What effect do these mandated benefits have on wages and employment levels? a. Value less than cost B = value to workers C = cost to firms B<C Shift down the demand curve by the exact amount of the benefit you offer them – Workers are worse off Employment goes down Total compensation goes down – Firms are worse off The cost of labor goes up ECON 139 SP 15 Antonovics 5 4-28-15 1 b. Value better than cost (normally this situation only happens when government steps in) B>C – Workers are better off Employment goes up Total compensation goes up – Firms are worse off The cost of labor goes down Eg: mandated maternal benefits hurts women workers Immigration 2 of 7
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