Topic 3: Dynamic Labour Supply Flashcards
Show hof the life cycle graphs change for a worker with an increased wage path.
It depends on the income / substitution effect.
Show the equations for the dynamic model of labour supply.
How could the labour supply respond to a recession?
Added worker effect: Secondary workers out of the labour force are drawn in to work due to reduced family wages.
Discouraged workers: unemployed workers give up looking for a job.
(not on lecture slides)
Low wage effect: All workers may choose to move to non-work activities such as study, and lean more on (higher) future wages.
What is the modern effect of wages on fertility?
Show the model.
Increased value of time means decreased leasure time.
The model has income which can be spent on goods or children.
Show the likely effect of an increase in the effective price of children.
