Labour Markets

James Foreman-Peck () and Peng Zhou ()
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James Foreman-Peck: Cardiff University
Peng Zhou: Cardiff University

Chapter Chapter 2 in Applied Economics in Globalised Economies, 2025, pp 33-58 from Springer

Abstract: Abstract This chapter examines the functioning of labour markets, with a focus on wage determination and labour market dynamics. We begin by introducing the neoclassical model of labour markets, illustrating how supply and demand interact to determine wages and employment under ideal competitive conditions. The chapter extends this baseline framework to analyse real-world deviations, such as wage differentials arising from worker attributes, job characteristics, and market frictions, including monopsony and union power. Key issues like the gender pay gap and the public–private-sector wage premium are explored using empirical methods, such as regression analysis and the Blinder-Oaxaca decomposition. The role of globalisation is embodied through its impact on labour demand, wage competition, and the increasing prevalence of gig work. Policy interventions, including minimum wages, wage caps, and labour market protections, are discussed in the context of balancing efficiency with equity. The chapter also highlights the influence of global competition on wage trends and employment patterns. By linking theoretical frameworks with empirical evidence, it provides insights into the complexities of modern labour markets and the policies needed to address persistent challenges like inequality and labour market segmentation.

Keywords: Labour markets; Wage determination; Gender pay gap; Public-sector wage premium; Minimum wage; Regression; Endogeneity; Labour economics (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-85621-1_2

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DOI: 10.1007/978-3-031-85621-1_2

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