BACKGROUND AND PURPOSE

One benefit of authoring a text that has met the test of the market is the opportunity to revise. Revision provides for improvement—to delete the archaic and install the novel, to rectify errors of omission or commission, to rewrite misleading or obscure statements, to introduce more relevant illustrations, to bring more recent data to bear, to upgrade organizational structure, and to enhance pedagogical aids—in short, to build on an accepted framework of ideas. We feel that those who examine this new eighth edition of Contemporary Labor Economics will agree that we have fully exploited this opportunity.

Our basic purpose remains that of presenting the content of the “new” labor economics in a logical and readable fashion. While such traditional topics as labor law, the structure of unions, and collective bargaining have not been entirely crowded out, our focus is clearly on labor economics as an applied field of micro and macro theory. This volume is based on the assumption that labor economics is no longer an area tangential to the core of analytical economics but rather a critical component of that core.

The level of analysis is tailored for the undergraduate student who has completed a standard sequence on macro and micro principles. The book is designed for a one-semester or one-quarter course, although appropriate supplementation can make it usable as the focal point of a two-semester course.

THE EIGHTH EDITION

This new edition incorporates many significant changes, several of which were motivated by the comments of colleagues and students. We are especially grateful to the scholars cited in the acknowledgments who provided reviews of the various editions or commented on drafts of the new edition.

The most visible and significant modifications and additions to Contemporary Labor Economics are these:

• Public policy issues: This edition includes a number of new discussions of public policy issues, including illegal aliens, human trafficking, union bargaining power, private military companies, the gender wage gap, unemployment benefits, and participant direction in pension plans.



• Continuing and expanded emphasis on global aspects of U.S. labor markets: The text's integrated focus on global aspects of U.S. labor markets has continued and been expanded with this edition. For example, this edition includes new World of Work boxes on human trafficking (Chapter 9), illegal aliens (Chapter 9), and the Danish flexicurity labor market model (Chapter 18). These new World of Work boxes join existing discussions of comparative advantage and international trade (Chapter 5), outsourcing (Chapter 5), trade liberalization and labor standards (Chapter 6), NAFTA (Chapter 6), international pay differences (Chapter 8), international differences in the gender pay gap (Chapter 14), and cross-country differences in intergenerational earnings mobility (Chapter 16). Also, each chapter includes Global Perspectives boxes that provide international comparison in various topics.



• New World of Work sections: Fourteen of the World of Work boxes are new to this edition. The new titles to this edition are More Flexible Work Schedules; The Power of the Pill; Time Stress; Reversal of the College Gender Gap; Do Medical Students Know How Much Doctors Earn?; Participant Direction in Pension Plans; Do Former College Athletes Earn More Than Nonathletes?; Human Trafficking; What Jobs Do Illegal Aliens Hold?; A Divorce in the Union Movement; The Highest-Paid Blue-Collar Workers; Private Military Companies; The Gender Pay Gap: Slowing Convergence; and the Danish Flexicurity Model.

ORGANIZATION AND CONTENT

The subject matter in this book generally proceeds from micro to macro topics. Figure 1.1 and the “Overview” section of Chapter 1 outline the organizational framework in some detail. Thus we simply call your attention to the figure here; we trust that Figure 1.1 and its accompanying discussion will clearly express our organizational approach. We recognize that other chapter orderings are possible and in fact may be optimal for many professors. Also, our bias has been to be inclusive in our presentation of topics. Professors can easily overcome this bias by selecting chapters for their own classes.

DISTINGUISHING FEATURES

At the hazard of immodesty, we feel that this volume embodies a number of features that distinguish it from other books in the field.

Content

In the area of subject matter, the emphasis in Chapter 6 and elsewhere on allocative efficiency is both unique and desirable. The efficiency emphasis makes students realize that society has an interest in how labor markets function. Chapter 7 brings together the literature on the principal–agent problem and the “new economics of personnel” in a single, focused chapter. Chapter 8 on the wage structure has been consistently praised by instructors for providing a thorough, systematic treatment of wage differentials and a simplified presentation of the hedonic wage theory. The comprehensive analysis of the impacts of unions and government on labor markets found in Chapters 10–13 also sets this book apart.

Chapter 14 provides extensive analysis of labor market discrimination and antidiscrimination policies. Chapter 15 discusses job search within and outside the firm. Chapter 16 confines its focus almost entirely to the distribution of personal earnings, rather than the usual discussion of the distribution of income and the poverty problem. We believe this approach is more relevant for a textbook on labor economics. The critical topic of labor productivity has been largely ignored or treated in a piecemeal fashion in other books. We have upgraded this topic by according it extensive treatment in Chapter 17. Chapter 18 looks at employment and unemployment through a stock–flow perspective and uses the aggregate demand–aggregate supply model to examine natural versus cyclic unemployment. Finally, the appendix provides a comprehensive discussion of information sources that can be used to widen and deepen the reader's understanding of the field.

Organization and Presentation

We have put great stress on the logical organization of subject matter, not only chapter by chapter but within each chapter. We have sought to develop the subject matter logically from micro to macro, from simple theory to real-world complications, and from analysis to policy. Similarly, considerable time has been spent in seeking the optimal arrangement of topics within each chapter. Chapter subheadings have been used liberally; our feeling is that the student should always be aware of the organizational structure and directional flow of the subject matter.

Many key topics of labor economics will be intellectually challenging for most students. We have tried not to impair student understanding with clumsy or oblique exposition. Our purpose is to communicate effectively with students. To this end we have taken great care that our writing be clear, direct, and uncluttered. It is our goal that the material contained herein be highly accessible to the typical college undergraduate who has limited training in economics.

Pedagogical Features

We have included a variety of pedagogical devices that instructors tell us significantly contribute to student understanding. First, the introduction of each chapter states the goals of the chapter and, in many cases, relates the chapter to prior or future chapters. Second, end-of-chapter summaries provide a concise, point-by-point recapitulation of each chapter. Third, key terms and concepts are highlighted at the end of each chapter, and a comprehensive glossary of these and other terms is located at the end of the book. Fourth, ample lists of questions are provided at the end of each chapter. These range from open-ended discussion questions to numerical problems that let students test their understanding of basic analytical concepts. Fifth, each chapter includes one or two Internet exercises and links that help students increase their understanding of the material as well as obtain the most current data available. Sixth, we have used the inside covers of the book to present relevant historical statistics that are valuable to both students and instructors. Seventh, the within-chapter “Quick Review” summaries and “Your Turn” questions should help students identify key points and study for exams. Furthermore, as indicated previously, the appendix of the book lists and discusses ways the interested reader can update statistical materials found in the book and continue the learning process beyond the course. Finally, we have included 72 short “World of Work” minireadings in this edition.