The neoclassical model of labour leisure choice

The neoclassical model of labour leisure choice In this society, not many people can afford goods and education without working. Since we are not all wealthy, most of us must work in order to cover our living costs and other expenses (Borjas, 2008). However, our decisions on whether to work or not are based on many factors that motivate or discourage us to enter the labour force, then we need to decide how many hours to work. The first and second part of the essay will discuss about an individuals work-leisure decision regarding to her decision to work or not, and the number of hours to work. In the third part, I will discuss about Clarks report on job satisfaction of men and women. Although women had higher levels of reported stress in their life, they appear to be happier in work than men. Finally, the results which are recently reported by Booth and van Ours (2007) also support Clarks conclusions. The neoclassical model of labour-leisure choice is used to analyse labour supply behaviour and identify the factors in a persons work decision and her decision on how many hours to work (Borjas, 2008). In this model, individuals satisfaction which is obtained from consumption of goods (denoted as C) and leisure (L) is presented by utility function (economists assume that both goods and leisure are normal goods): We want to maximise our well-being by consuming as much goods and leisure as we can. However, there is a trade-off between consumption and leisure (Sparknotes, 2010). If we want to consume more leisure, then we have to give up goods and services because we cannot afford them since we work less (or do not work). In the other hand, if we spend more time to work, then we are wealthy enough to buy those goods and services; though we cannot consume as much leisure as before. In order to understand an individuals work-leisure decision, we use indifference curve analysis to explain their responses. Indifference curve analysis consists of two concepts: indifference curve and budget constraint (bized). A person will make her decision through the combination of the consumption of leisure and goods, in which we can analyse her work-leisure decision through a combination of her budget constraints and her indifference curves. The persons budget constraint can be written as: Where C: the value of expenditures on goods, wh: labour earning, and V: non-labour income (such as property income, lottery prises, medical insurance, disability insurance, dividends, retirements program) The total time allocated to work and leisure must equal the total time available in the period, say T hours per week, so that: Figure 1 illustrates the optimisation in utility of a person by combining her budget constraint and indifference curves. She will choose point P (as this is her optimal consumption of goods and leisure) because she is better off at point P. At point P, she will consume T1 hours of leisure and h1 hours of work per week. Note that in this figure, we assume that the indifference curves are convex to the origin, which is equivalent to assumption of diminishing marginal rate of substitution. It is the amount of consumption a person is willing to give up for an extra hour of leisure time diminishes as leisure time increases (lecture note). We are interested in how many hours of work a person will choose when non-labour income (V) (may be because of higher investments return or inheritance money) or wage (w) increases. There are two types of effects which dominate in this model: the income effect and the substitution effect. When non-labour income increases (holding the wage constant), the income effect reduce hours of work (as people tend to take more leisure as they feel wealthier) The workers opportunity set expands as non-labour income increases, thus leads to a parallel shift in her budget line. An increase in non-labour income also means that when holding the wage constant and the income effect generates, the worker tend to reduce hours of work (assume that leisure is a normal good). When the wage rate increases, its total effect is the sum of the income and substitution effects. A person will reduce her hours of work if the income effect dominates (in this case, a person is effected only if she is working); instead if the substitution effect dominates, she will increase her hours of work. If both effects are equal, then there will be no change on individuals hours of work or hours of leisure. In Figure 3, as the wage rate increase, the income effect generates lead to a decrease in hours of work (movement from point A to B), however, as the substitution effect has equal effect, individual will increase her hours of work (movement from point B to C). As we can see, the hours of work are still the same. A person makes her decision to work or not to work is based on the reservation wage. It is said that when the real wage exceed reservation wage, the workers will enter labour market. Therefore, if there is a high reservation wage, people are less likely to work. However, if we hold the reservation wage constant, high-wage persons are more likely to work. The neoclassical model of labour-leisure choice has some limitations such as: it considers only leisure and goods and ignores home production; it has simple linear budget constraints as in fact, the budget constraints are nonlinear due to taxes, government benefits; labour supply decision may be affected by other members decision of a household; and finally, it is one-period model, whereas lifetime labour supply model is more complex and dynamic (lecture notes). Womens participation rate in labour force has been increasing due to: rise in real wage (encourages women to enter the labour market), decline in birth rate since the costs of having one more child are very expensive, technological advances (which are the convenient products to help women in household activities), social and cultural factors (feminism, religion), expansion of service industries, and low unemployment (lecture notes). Mammen and Paxon (2000) state that education levels, for women themselves and their spouses, is an important factor in womens labour-decision. In a competitive labour market, women will consider the opportunity cost of her time and the income that unearned (non-labour income). A woman will withdraw from labour force if there is an increase in her non-labour income (may be because her husbands income has risen). However, when womens wage rises, it depends on whether substitution or income effect dominates. One interesting finding which made by Andrew Clark (1997) is that womens job satisfaction levels are higher than men. Firstly, he introduced his theory of four possible explanations for womens higher levels of job satisfaction, which are: jobs and gender, work values, sample selection, and expectations. Clark used the individual and job characteristics as control variables in ordered probit regressions to test all the explanations, except for the sample selection explanation, in which he used Heckman sample correction in OLS regressions. His theory is presented as the utility function from working: u = u(y, h, i, j) (1) where y is income, h is hours of work, and i is individuals feature and j is job characteristics. He concluded that gender (i variables) should not enter the equation (1), for example: an identical man and woman in identical jobs should report the same job satisfaction score (Clark, 1997). The data in this paper were collected from the British Household Panel Survey (BHPS) which interviewed 10,000 adults in 550 households in 1991. They were asked to rate their satisfaction levels (by the scale number from one to seven) with eight job aspects: promotion prospects, relations at work, job security, own initiative, total pay, the actual work itself, hours of work and something else. Clark argued that job satisfaction has correlations with the genders differences such as: age, education, health, and different job characteristics: establishment size, union membership and hours of work. He found that good health has large positive effect on job satisfaction while renter, union membership, and hours of work have small negative effects (an increase in hours to 50 per week only reduces the predicted probability of reporting overall job satisfaction of 7 to 38% and 30% for women and men, respectively); moreover, higher levels of educations and longer hours of work are connected with lower satisfied workers. Especially, womens overall job satisfaction is largely determined by renter, union, marital status and managerial status. However, these findings only justify which types of workers are satisfied, not why women are more satisfied than men. The second explanation of this paper is work values (as men and women consider the work aspects differently). Men choose promotion prospects, job security and pay, are the most important jobs aspects; while women rank highly the aspects such as: relations at work and hours of work. Nevertheless, the results show that women who have same jobs, same personal characteristics and same work values, report a higher job satisfaction score than men do. Thus, work values do not explain why women are so happier at work. The third explanation of womens higher job satisfaction (sample selection tests how the individual feel about working) is not effective since it relies on men and womens participation rate. Clark highlighted that men are more likely to be in employment than women; specifically, married women are less likely to be employed. Since the sample sizes are small (mens participation rate is higher than women) Expectations are the last explanation for womens higher job satisfaction. Clark (1997) stated that women are happier at work than men, because they have lower expectations. Education and upbringing form a part of expectations. For the higher-educated workers, younger workers, those whose mothers had a professional job, those in professional positions, and those working at male-dominated workplaces are likely to have higher expectations about their job aspects. Clark suggested that there is only a temporary result in womens higher job satisfaction which is explained by improved position of women in the society and labour market. He predicted that womens expectations and job satisfaction would be the same as men, given that womens pay only rise at the same pay rates of men. (gender) used the pooled ordered probit models to show that in the past decade, womens job satisfaction has indeed declined significantly (nearly by half), while mens job satisfaction has slightly changed. This paper results support the theory that womens higher job satisfaction is only transitory and Clarks prediction of gender differences in job satisfaction. Furthermore, the results found by Booth and van Ours (2009) are indeed supportive to Clarks conclusions. Akerlof and Kranton (2000, cited by Booth and van Ours (2009)) stated that womens improved position in society (such as the female suffragette movement) has made it more tolerable for women to work. This paper examines the relationship between part-time jobs and family well-being by using fixed-effects ordered logit estimation method on the panel data from the Household, Income and Labour Dynamics in Australia (HILDA). Hours satisfaction is considered to be one aspect of both men and womens job satisfaction. Womens job satisfaction is said to be increasing follow their partners health. The results from pooled cross-sectional data indicate that men and womens job satisfaction is higher if their family income and health are high, which is consistent with Clarks findings. While full-time work reduces womens hours satisfaction and job satisfaction, it increases mens hours and job sati sfaction. Booth and van Ours (20009) concluded that the male share of house work is always low even when the female spend enormous hours in marketplace. This finding proposes an explanation why women are happier with part-time work. (developing) In contrast to Booth and van Ours findings, Boo (2010) states that in developing countries (as in Honduras), women do not have higher job satisfaction refer to part-time job. Alternatively, both women and men are more satisfied when they are working full-time. For the fact that working full-time increases individuals income, poorer women seems to value full-time jobs than non-poor women.

Case Anaylsis -Dr. Pepper Snapple Inc.

Dr. Pepper Snapple Group, Inc. (DPS) is an integrated beverage brand owner, manufacturer, and distributor of non-alcoholic beverages in the U. S. , Canada, and Mexico and the Caribbean. Their headquarters is in Plano, Texas, and Dr Pepper Snapple Group, Inc. is a leading provider of flavored carbonated soft drinks and non-carbonated beverages. They have built their success through strategically acquiring beverage brands and then building them into leaders in their category. Examples of their notable acquisitions included the Duffy-Mott Company (later known as Mott’s), Canada Dry, Sunkist, Crush and Sun Drop.According to the text, through focused strategic development the company has sought to continually establish their firm as a leader in the higher margin segments of the non alcoholic beverage industry. Therefore, the company’s corporate level strategy entails building and enhancing their leading brands, as well as focusing on leading opportunities with high growth an d high margin. In addition, the company wants to increase their presence in high margin channels and packages. Furthermore, the company wants to strengthen their route-to-market through acquisitions and improve their operating efficiency.Throughout, the current economic downfall, DPS has maintained growth because a key element of their corporate level strategy is adding others soda brands, and changing emphasis among the different soda brands. By doing this the company is making the right moves to establish their positions in the industry and achieving an appropriate amount and kind of diversification in the soda industry in order to continually grow. Another aspect of the company's strategy, involves building a uniquely strong and distinctive competencies in their soda brand i. e. he taste and marketing of Dr. Pepper. This is crucial to their success and is used to maintain a competitive edge over their competitors. In order to establish their competitive advantage amongst competit ors the company uses the best-cost provider strategy. Their strategy is trying to give customers the best cost/value combination, by incorporating a key good-or-better product characteristics at a lower cost than competitors. In other words, there are numerous types of sodas on the market; but DPS strives at making their soda distinctive but with an affordable price.The company faces several strategic issues within their industry. Within the industry, factors such as economic stability, consumer tastes and preferences, and commodites prices are issues that DPS are facing. Since carbonated soft drinks are a discretionary item, sales are considerably impacted by weakness in the economy; consequently, economic stability is a huge factor that DPS would have to face. Due to the economic downturn discretionary spending as a percentage of total consumer spending dropped below 16 percent, lower than it had been for over 50 years.As discretionary spending decreased, consumers turned from fla vored soft drinks and colas to less expensive alternatives, including tap water. Not only did the economy influence confidence, the recession significantly increased commodity prices. Specific to the beverage industry, the prices for aluminum, natural gas, resins, corn, pulp and all other commodities increased. These types of commodities are used in the production of beverages, exerting a considerable amount of pressure on industry margins. Moreover the most significant issues that DPS will have to face is the increasing market trend in health and wellness.Consumers are reducing caloric intake and are looking for products richer in vitamins. Therefore the less-healthy sectors of the beverage industry are expected to decline, while demand for healthier alternatives like low or no calorie soft drinks and noncarbonated drinks such as sports drinks, ready-to-drink teas and flavored and regular bottled water are projected to grow. DPS should continue implementing their corporate level st rategy and competing in the industry as a best cost provider in order to maintain market growth.The recession has impacted several companies; but it is important to maintain adequate marketing ploys to appeal to consumers i. e. The Sun Drop Commercial. Regardless, of the recession DPS should focus on delivering a quality product despite the increase in their commodity prices. In addition, their market target shall expand more overseas to reach more consumers. By doing more creative advertising and appealing to consumer; the company shall see more sales growth. Since there is an increase in commodity prices, the company might also consider divesting products that are not doing well.In addition, DPS needs to be more innovative in their research and development for developing a healthy soft drink that consumer will enjoy. Since, the U. S. which is their biggest market section, is going on a â€Å"diet† or in other word becoming more health conscious. DPS might want to jump on th e bandwagon of producing a healthier soda but the company should not try to mimic what other companies are doing. Instead try to invest in the R that is focused healthier trend soda to reach more consumers.

Discuss the Ways in Which the Writers Present Ambition in...

In â€Å"The White Devil† by Webster and â€Å"Paradise Lost Boox IX† by Milton there are a handful of characters that are driven by ambition. These characters often make foolish decisions to achieve their goals, often with consequences. Both Webster and Milton present ambition as a positive motivation but show that being over ambitious for personal gain has detrimental effects. In â€Å"The White Devil† Webster presents Flamineo as the most ambitious character in the play. He is driven by the personal goal of climbing up the class ladder and will go to any measures to ensure this happens. In Act I, Scene II we see him act as a pander for Bracciano and Vittoria, dealing with their meeting in a highly pragmatic way by deceiving Camillo so a meeting can†¦show more content†¦In comparison to Flamineo Milton presents Satan as an ambitious character, again for person gain. However, Satan’s personal goal is not to heighten his own position but to lower the position of God. However, unlike Flamineo, Satan fears the consequences of his actions from the start, knowing he has been expelled from Eden before so travels â€Å"cautious of day† so not to be seen by the angels and God as he looks for a way into Eden. Where Flamineo’s actions are planned and he acts practically, Satan is less calculated in his actions. He has to search fo r an animal in which to hide in. He eventually settles for â€Å"The serpent subtlest beast of all the field.† Satan’s actions are foolish as although not seen in Book IX he is highly punished for his actions and is condemned to life as a snake forever more. Milton uses epic similes within Book IX to show the actions of Satan, one from lines 510-150 shows Satan’s ambition is so strong he will go the long way around like a â€Å"skilful steersman† to achieve his final goal. This epic simile is particularly impressive as the beginning of the lines of the simile form an acrostic, the first letter of each line spelling out â€Å"SATAN†. However, as Chloe Batt highlights in her essay â€Å"The remaking of the Epic† Milton doesn’t â€Å"restrict himself solely to the epic mode† and instead â€Å"Milton defends his

Argumentative Essay Failing The Fathers - 1291 Words

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