Labour economicsChapter 1: Introduction
What labour economics studies
Key facts
Key facts
- Course
- Labour economics, ECON 331
- Textbook
- Borjas, chapter 1
- Related
Labour economics studies how labour markets work: how workers decide whether and how much to work, how firms decide whom to hire and what to pay, and how the two sides meet to set wages and employment. Its models predict how those outcomes respond to shocks and to policies such as minimum wages, payroll taxes and Employment Insurance, and its empirical methods test the predictions against data.
The actors
Section titled “The actors”Models of the labour market assign each participant a goal and derive its behaviour from that goal.
| Actor | Assumed goal | Main decisions | What it generates |
|---|---|---|---|
| Workers | Maximize utility from consumption, leisure and job attributes | Whether to work, how many hours, which job | Labour supply |
| Firms | Maximize profit | How many workers to hire, of which skills, at what pay | Labour demand |
| Government | Pursue policy goals | Minimum wages, payroll taxes, Employment Insurance, safety and licensing rules | The rules of exchange |
| Unions | Advance their members’ interests | Bargain over wages, hours and conditions | Collective agreements |
Workers are the central actors. A worker looks for the best job, judged by the wage, the hours and schedule, the working conditions and the satisfaction it offers, and weighs paid work against the value of time spent at home. Because more pay usually draws out more time and effort, the labour supply curve, which plots the hours or workers offered at each wage, usually slopes upward. The work-leisure model derives it.
Firms hire workers to produce output, so the demand for labour is a derived demand: it comes from consumers’ demand for what the workers make. A firm hires a worker when the worker adds more to revenue than to cost. The resulting labour demand curve, the number of workers hired at each wage, slopes downward (short-run labour demand).
Government sets the terms of trade. Provinces set minimum wages: Alberta’s general minimum wage has been $15 an hour since October 2018.1 Ottawa collects Canada Pension Plan contributions and Employment Insurance premiums on every paycheque (payroll taxes). Licensing and safety codes restrict who may do a job and how. Unions bargain on behalf of their members; in 2025, 30.6 percent of Canadian employees were union members or covered by a collective agreement.2
Why economists use models
Section titled “Why economists use models”A list of facts, such as last year’s unemployment rate, predicts nothing about the next shock. A model keeps the few variables that drive an outcome and drops the rest, so it can predict how markets respond to situations not yet seen, from a pipeline boom to a pandemic. Workers’ preferences matter but cannot be observed; wages, prices and incomes can. Models are built so that their predictions depend on observable variables, which is what makes them testable. Regression and natural experiments are the main tests.
Supply and demand for labour
Section titled “Supply and demand for labour”The simplest labour market model makes three assumptions: all workers in the occupation are identical, they all earn the same wage, and the market is competitive, so every firm and worker takes the wage as given. The equilibrium wage is the wage at which the quantity of labour supplied equals the quantity demanded:
- Engineers firms want to hire
- 50k
- Engineers who want these jobs
- 50k
- Shortage
- 0k
- Surplus
- 0k
Equilibrium is where the market settles. At a salary above , more engineers want jobs than firms will fill; unemployed engineers compete for the scarce openings and the salary falls. Below , firms cannot fill their openings and bid the salary up.
A change in the wage moves the market along both curves. The curves themselves shift only when something else changes:
- Labour demand shifts with the price of the output, workers’ productivity and technology, and the prices of other inputs such as capital.
- Labour supply shifts with the size of the working-age population, preferences for work, non-labour income and the pay available in other occupations.
The model ignores differences that matter in practice, such as the quality of the workplace or of the engineer. Later chapters relax those assumptions (compensating differentials, returns to schooling).
A labour demand shock: the Alaska pipeline
Section titled “A labour demand shock: the Alaska pipeline”A labour demand shock is an unexpected shift of the labour demand curve. To move oil from Prudhoe Bay on Alaska’s North Slope to the port of Valdez, oil companies built the 800-mile Trans-Alaska Pipeline between April 1974 and June 1977.3 About 70,000 people worked on building the line, in a remote state, and the need was temporary: running a finished pipeline takes far fewer workers than building it.
The model predicts three phases:
- Short run. Labour demand in Alaska shifts right. Supply is steep, because few workers live there and moving takes time, so the wage rises sharply and employment rises.
- Longer run. The high wage draws workers from the rest of the country. Supply shifts right, pulling the wage back down while employment rises further.
- End of construction. Demand shifts back toward its original position. Wages and employment fall back toward their pre-boom path; if the migrants stay, the wage falls below its old level until some of them leave.
- Wage
- $25.00
- Employment
- 30.0k
- Change in wage
- $5.00
- Change in employment
- 10.0k
Worked example
Section titled “Worked example”Labour demand for construction workers in Alaska is and supply is , with in thousands of workers and in dollars per hour.
-
Initial equilibrium. gives and .
-
Construction raises the wage firms will pay by $10 at every employment level. Demand becomes . Then gives and : the wage rises $5 and employment by 10,000.
-
20,000 workers move in. Supply shifts right by 20 at every wage: . With construction demand, gives and . Migration has erased the wage gain; employment is double its starting level.
-
Construction ends. Demand returns to while the migrants remain: gives and . The wage is now below its pre-boom level, which pushes some workers to leave again.
Evidence
Section titled “Evidence”Alaska. Between 1973 and 1976 Alaska added more than 50,000 jobs, a 56 percent increase, including more than 20,000 mostly high-paying construction jobs; total construction payroll grew from $153 million in 1973 to $1.5 billion in 1976. Jobs fell in 1977, the year the pipeline was finished, and growth resumed in 1978.4 William Carrington’s study of the pipeline era found that Alaskan wages were very flexible, that labour supply was quite elastic in both hours and the number of workers, and that even a major short-run demand shock need not have a long-run impact.5 Those are the model’s phases: a sharp wage and employment response, a strong supply response, and a return toward the old path.
Monthly employment in Alaska has a saw-tooth shape because work there is unusually seasonal: in 2024 the state had about 14 percent more jobs in July than in January, the largest swing of any state. Preparing to build the pipeline made the summer construction peaks of the mid-1970s even larger.6
Alberta. Energy prices shift labour demand in Western Canada the same way. Comparing local labour markets with and without energy resources, Joseph Marchand found that energy price booms raised earnings and employment both in energy extraction and in other local industries: for every ten extraction jobs created in a boom, about three construction jobs, two retail jobs and four and a half service jobs followed.7
Crude oil price: West Texas Intermediate
Monthly average spot price, Cushing, Oklahoma
Show the data and notes
Monthly averages of daily spot prices, nominal dollars (not adjusted for inflation).
| Period | WTI |
|---|---|
| Jan 1986 | $22.93 |
| Feb 1986 | $15.46 |
| Mar 1986 | $12.61 |
| Apr 1986 | $12.84 |
| May 1986 | $15.38 |
| Jun 1986 | $13.43 |
| Jul 1986 | $11.59 |
| Aug 1986 | $15.10 |
| Sep 1986 | $14.87 |
| Oct 1986 | $14.90 |
| Nov 1986 | $15.22 |
| Dec 1986 | $16.11 |
| Jan 1987 | $18.65 |
| Feb 1987 | $17.75 |
| Mar 1987 | $18.30 |
| Apr 1987 | $18.68 |
| May 1987 | $19.44 |
| Jun 1987 | $20.07 |
| Jul 1987 | $21.34 |
| Aug 1987 | $20.31 |
| Sep 1987 | $19.53 |
| Oct 1987 | $19.86 |
| Nov 1987 | $18.85 |
| Dec 1987 | $17.28 |
| Jan 1988 | $17.13 |
| Feb 1988 | $16.80 |
| Mar 1988 | $16.20 |
| Apr 1988 | $17.86 |
| May 1988 | $17.42 |
| Jun 1988 | $16.53 |
| Jul 1988 | $15.50 |
| Aug 1988 | $15.52 |
| Sep 1988 | $14.54 |
| Oct 1988 | $13.77 |
| Nov 1988 | $14.14 |
| Dec 1988 | $16.38 |
| Jan 1989 | $18.02 |
| Feb 1989 | $17.94 |
| Mar 1989 | $19.48 |
| Apr 1989 | $21.07 |
| May 1989 | $20.12 |
| Jun 1989 | $20.05 |
| Jul 1989 | $19.78 |
| Aug 1989 | $18.58 |
| Sep 1989 | $19.59 |
| Oct 1989 | $20.10 |
| Nov 1989 | $19.86 |
| Dec 1989 | $21.10 |
| Jan 1990 | $22.86 |
| Feb 1990 | $22.11 |
| Mar 1990 | $20.39 |
| Apr 1990 | $18.43 |
| May 1990 | $18.20 |
| Jun 1990 | $16.70 |
| Jul 1990 | $18.45 |
| Aug 1990 | $27.31 |
| Sep 1990 | $33.51 |
| Oct 1990 | $36.04 |
| Nov 1990 | $32.33 |
| Dec 1990 | $27.28 |
| Jan 1991 | $25.23 |
| Feb 1991 | $20.48 |
| Mar 1991 | $19.90 |
| Apr 1991 | $20.83 |
| May 1991 | $21.23 |
| Jun 1991 | $20.19 |
| Jul 1991 | $21.40 |
| Aug 1991 | $21.69 |
| Sep 1991 | $21.89 |
| Oct 1991 | $23.23 |
| Nov 1991 | $22.46 |
| Dec 1991 | $19.50 |
| Jan 1992 | $18.79 |
| Feb 1992 | $19.01 |
| Mar 1992 | $18.92 |
| Apr 1992 | $20.23 |
| May 1992 | $20.98 |
| Jun 1992 | $22.39 |
| Jul 1992 | $21.78 |
| Aug 1992 | $21.34 |
| Sep 1992 | $21.88 |
| Oct 1992 | $21.69 |
| Nov 1992 | $20.34 |
| Dec 1992 | $19.41 |
| Jan 1993 | $19.03 |
| Feb 1993 | $20.09 |
| Mar 1993 | $20.32 |
| Apr 1993 | $20.25 |
| May 1993 | $19.95 |
| Jun 1993 | $19.09 |
| Jul 1993 | $17.89 |
| Aug 1993 | $18.01 |
| Sep 1993 | $17.50 |
| Oct 1993 | $18.15 |
| Nov 1993 | $16.61 |
| Dec 1993 | $14.52 |
| Jan 1994 | $15.03 |
| Feb 1994 | $14.78 |
| Mar 1994 | $14.68 |
| Apr 1994 | $16.42 |
| May 1994 | $17.89 |
| Jun 1994 | $19.06 |
| Jul 1994 | $19.66 |
| Aug 1994 | $18.38 |
| Sep 1994 | $17.45 |
| Oct 1994 | $17.72 |
| Nov 1994 | $18.07 |
| Dec 1994 | $17.16 |
| Jan 1995 | $18.04 |
| Feb 1995 | $18.57 |
| Mar 1995 | $18.54 |
| Apr 1995 | $19.90 |
| May 1995 | $19.74 |
| Jun 1995 | $18.45 |
| Jul 1995 | $17.33 |
| Aug 1995 | $18.02 |
| Sep 1995 | $18.23 |
| Oct 1995 | $17.43 |
| Nov 1995 | $17.99 |
| Dec 1995 | $19.03 |
| Jan 1996 | $18.86 |
| Feb 1996 | $19.09 |
| Mar 1996 | $21.33 |
| Apr 1996 | $23.50 |
| May 1996 | $21.17 |
| Jun 1996 | $20.42 |
| Jul 1996 | $21.30 |
| Aug 1996 | $21.90 |
| Sep 1996 | $23.97 |
| Oct 1996 | $24.88 |
| Nov 1996 | $23.71 |
| Dec 1996 | $25.23 |
| Jan 1997 | $25.13 |
| Feb 1997 | $22.18 |
| Mar 1997 | $20.97 |
| Apr 1997 | $19.70 |
| May 1997 | $20.82 |
| Jun 1997 | $19.26 |
| Jul 1997 | $19.66 |
| Aug 1997 | $19.95 |
| Sep 1997 | $19.80 |
| Oct 1997 | $21.33 |
| Nov 1997 | $20.19 |
| Dec 1997 | $18.33 |
| Jan 1998 | $16.72 |
| Feb 1998 | $16.06 |
| Mar 1998 | $15.12 |
| Apr 1998 | $15.35 |
| May 1998 | $14.91 |
| Jun 1998 | $13.72 |
| Jul 1998 | $14.17 |
| Aug 1998 | $13.47 |
| Sep 1998 | $15.03 |
| Oct 1998 | $14.46 |
| Nov 1998 | $13.00 |
| Dec 1998 | $11.35 |
| Jan 1999 | $12.52 |
| Feb 1999 | $12.01 |
| Mar 1999 | $14.68 |
| Apr 1999 | $17.31 |
| May 1999 | $17.72 |
| Jun 1999 | $17.92 |
| Jul 1999 | $20.10 |
| Aug 1999 | $21.28 |
| Sep 1999 | $23.80 |
| Oct 1999 | $22.69 |
| Nov 1999 | $25.00 |
| Dec 1999 | $26.10 |
| Jan 2000 | $27.26 |
| Feb 2000 | $29.37 |
| Mar 2000 | $29.84 |
| Apr 2000 | $25.72 |
| May 2000 | $28.79 |
| Jun 2000 | $31.82 |
| Jul 2000 | $29.70 |
| Aug 2000 | $31.26 |
| Sep 2000 | $33.88 |
| Oct 2000 | $33.11 |
| Nov 2000 | $34.42 |
| Dec 2000 | $28.44 |
| Jan 2001 | $29.59 |
| Feb 2001 | $29.61 |
| Mar 2001 | $27.25 |
| Apr 2001 | $27.49 |
| May 2001 | $28.63 |
| Jun 2001 | $27.60 |
| Jul 2001 | $26.43 |
| Aug 2001 | $27.37 |
| Sep 2001 | $26.20 |
| Oct 2001 | $22.17 |
| Nov 2001 | $19.64 |
| Dec 2001 | $19.39 |
| Jan 2002 | $19.72 |
| Feb 2002 | $20.72 |
| Mar 2002 | $24.53 |
| Apr 2002 | $26.18 |
| May 2002 | $27.04 |
| Jun 2002 | $25.52 |
| Jul 2002 | $26.97 |
| Aug 2002 | $28.39 |
| Sep 2002 | $29.66 |
| Oct 2002 | $28.84 |
| Nov 2002 | $26.35 |
| Dec 2002 | $29.46 |
| Jan 2003 | $32.95 |
| Feb 2003 | $35.83 |
| Mar 2003 | $33.51 |
| Apr 2003 | $28.17 |
| May 2003 | $28.11 |
| Jun 2003 | $30.66 |
| Jul 2003 | $30.76 |
| Aug 2003 | $31.57 |
| Sep 2003 | $28.31 |
| Oct 2003 | $30.34 |
| Nov 2003 | $31.11 |
| Dec 2003 | $32.13 |
| Jan 2004 | $34.31 |
| Feb 2004 | $34.69 |
| Mar 2004 | $36.74 |
| Apr 2004 | $36.75 |
| May 2004 | $40.28 |
| Jun 2004 | $38.03 |
| Jul 2004 | $40.78 |
| Aug 2004 | $44.90 |
| Sep 2004 | $45.94 |
| Oct 2004 | $53.28 |
| Nov 2004 | $48.47 |
| Dec 2004 | $43.15 |
| Jan 2005 | $46.84 |
| Feb 2005 | $48.15 |
| Mar 2005 | $54.19 |
| Apr 2005 | $52.98 |
| May 2005 | $49.83 |
| Jun 2005 | $56.35 |
| Jul 2005 | $59.00 |
| Aug 2005 | $64.99 |
| Sep 2005 | $65.59 |
| Oct 2005 | $62.26 |
| Nov 2005 | $58.32 |
| Dec 2005 | $59.41 |
| Jan 2006 | $65.49 |
| Feb 2006 | $61.63 |
| Mar 2006 | $62.69 |
| Apr 2006 | $69.44 |
| May 2006 | $70.84 |
| Jun 2006 | $70.95 |
| Jul 2006 | $74.41 |
| Aug 2006 | $73.04 |
| Sep 2006 | $63.80 |
| Oct 2006 | $58.89 |
| Nov 2006 | $59.08 |
| Dec 2006 | $61.96 |
| Jan 2007 | $54.51 |
| Feb 2007 | $59.28 |
| Mar 2007 | $60.44 |
| Apr 2007 | $63.98 |
| May 2007 | $63.46 |
| Jun 2007 | $67.49 |
| Jul 2007 | $74.12 |
| Aug 2007 | $72.36 |
| Sep 2007 | $79.92 |
| Oct 2007 | $85.80 |
| Nov 2007 | $94.77 |
| Dec 2007 | $91.69 |
| Jan 2008 | $92.97 |
| Feb 2008 | $95.39 |
| Mar 2008 | $105.45 |
| Apr 2008 | $112.58 |
| May 2008 | $125.40 |
| Jun 2008 | $133.88 |
| Jul 2008 | $133.37 |
| Aug 2008 | $116.67 |
| Sep 2008 | $104.11 |
| Oct 2008 | $76.61 |
| Nov 2008 | $57.31 |
| Dec 2008 | $41.12 |
| Jan 2009 | $41.71 |
| Feb 2009 | $39.09 |
| Mar 2009 | $47.94 |
| Apr 2009 | $49.65 |
| May 2009 | $59.03 |
| Jun 2009 | $69.64 |
| Jul 2009 | $64.15 |
| Aug 2009 | $71.05 |
| Sep 2009 | $69.41 |
| Oct 2009 | $75.72 |
| Nov 2009 | $77.99 |
| Dec 2009 | $74.47 |
| Jan 2010 | $78.33 |
| Feb 2010 | $76.39 |
| Mar 2010 | $81.20 |
| Apr 2010 | $84.29 |
| May 2010 | $73.74 |
| Jun 2010 | $75.34 |
| Jul 2010 | $76.32 |
| Aug 2010 | $76.60 |
| Sep 2010 | $75.24 |
| Oct 2010 | $81.89 |
| Nov 2010 | $84.25 |
| Dec 2010 | $89.15 |
| Jan 2011 | $89.17 |
| Feb 2011 | $88.58 |
| Mar 2011 | $102.86 |
| Apr 2011 | $109.53 |
| May 2011 | $100.90 |
| Jun 2011 | $96.26 |
| Jul 2011 | $97.30 |
| Aug 2011 | $86.33 |
| Sep 2011 | $85.52 |
| Oct 2011 | $86.32 |
| Nov 2011 | $97.16 |
| Dec 2011 | $98.56 |
| Jan 2012 | $100.27 |
| Feb 2012 | $102.20 |
| Mar 2012 | $106.16 |
| Apr 2012 | $103.32 |
| May 2012 | $94.66 |
| Jun 2012 | $82.30 |
| Jul 2012 | $87.90 |
| Aug 2012 | $94.13 |
| Sep 2012 | $94.51 |
| Oct 2012 | $89.49 |
| Nov 2012 | $86.53 |
| Dec 2012 | $87.86 |
| Jan 2013 | $94.76 |
| Feb 2013 | $95.31 |
| Mar 2013 | $92.94 |
| Apr 2013 | $92.02 |
| May 2013 | $94.51 |
| Jun 2013 | $95.77 |
| Jul 2013 | $104.67 |
| Aug 2013 | $106.57 |
| Sep 2013 | $106.29 |
| Oct 2013 | $100.54 |
| Nov 2013 | $93.86 |
| Dec 2013 | $97.63 |
| Jan 2014 | $94.62 |
| Feb 2014 | $100.82 |
| Mar 2014 | $100.80 |
| Apr 2014 | $102.07 |
| May 2014 | $102.18 |
| Jun 2014 | $105.79 |
| Jul 2014 | $103.59 |
| Aug 2014 | $96.54 |
| Sep 2014 | $93.21 |
| Oct 2014 | $84.40 |
| Nov 2014 | $75.79 |
| Dec 2014 | $59.29 |
| Jan 2015 | $47.22 |
| Feb 2015 | $50.58 |
| Mar 2015 | $47.82 |
| Apr 2015 | $54.45 |
| May 2015 | $59.27 |
| Jun 2015 | $59.82 |
| Jul 2015 | $50.90 |
| Aug 2015 | $42.87 |
| Sep 2015 | $45.48 |
| Oct 2015 | $46.22 |
| Nov 2015 | $42.44 |
| Dec 2015 | $37.19 |
| Jan 2016 | $31.68 |
| Feb 2016 | $30.32 |
| Mar 2016 | $37.55 |
| Apr 2016 | $40.75 |
| May 2016 | $46.71 |
| Jun 2016 | $48.76 |
| Jul 2016 | $44.65 |
| Aug 2016 | $44.72 |
| Sep 2016 | $45.18 |
| Oct 2016 | $49.78 |
| Nov 2016 | $45.66 |
| Dec 2016 | $51.97 |
| Jan 2017 | $52.50 |
| Feb 2017 | $53.47 |
| Mar 2017 | $49.33 |
| Apr 2017 | $51.06 |
| May 2017 | $48.48 |
| Jun 2017 | $45.18 |
| Jul 2017 | $46.63 |
| Aug 2017 | $48.04 |
| Sep 2017 | $49.82 |
| Oct 2017 | $51.58 |
| Nov 2017 | $56.64 |
| Dec 2017 | $57.88 |
| Jan 2018 | $63.70 |
| Feb 2018 | $62.23 |
| Mar 2018 | $62.73 |
| Apr 2018 | $66.25 |
| May 2018 | $69.98 |
| Jun 2018 | $67.87 |
| Jul 2018 | $70.98 |
| Aug 2018 | $68.06 |
| Sep 2018 | $70.23 |
| Oct 2018 | $70.75 |
| Nov 2018 | $56.96 |
| Dec 2018 | $49.52 |
| Jan 2019 | $51.38 |
| Feb 2019 | $54.95 |
| Mar 2019 | $58.15 |
| Apr 2019 | $63.86 |
| May 2019 | $60.83 |
| Jun 2019 | $54.66 |
| Jul 2019 | $57.35 |
| Aug 2019 | $54.81 |
| Sep 2019 | $56.95 |
| Oct 2019 | $53.96 |
| Nov 2019 | $57.03 |
| Dec 2019 | $59.88 |
| Jan 2020 | $57.52 |
| Feb 2020 | $50.54 |
| Mar 2020 | $29.21 |
| Apr 2020 | $16.55 |
| May 2020 | $28.56 |
| Jun 2020 | $38.31 |
| Jul 2020 | $40.71 |
| Aug 2020 | $42.34 |
| Sep 2020 | $39.63 |
| Oct 2020 | $39.40 |
| Nov 2020 | $40.94 |
| Dec 2020 | $47.02 |
| Jan 2021 | $52.00 |
| Feb 2021 | $59.04 |
| Mar 2021 | $62.33 |
| Apr 2021 | $61.72 |
| May 2021 | $65.17 |
| Jun 2021 | $71.38 |
| Jul 2021 | $72.49 |
| Aug 2021 | $67.73 |
| Sep 2021 | $71.65 |
| Oct 2021 | $81.48 |
| Nov 2021 | $79.15 |
| Dec 2021 | $71.71 |
| Jan 2022 | $83.22 |
| Feb 2022 | $91.64 |
| Mar 2022 | $108.50 |
| Apr 2022 | $101.78 |
| May 2022 | $109.55 |
| Jun 2022 | $114.84 |
| Jul 2022 | $101.62 |
| Aug 2022 | $93.67 |
| Sep 2022 | $84.26 |
| Oct 2022 | $87.55 |
| Nov 2022 | $84.37 |
| Dec 2022 | $76.44 |
| Jan 2023 | $78.12 |
| Feb 2023 | $76.83 |
| Mar 2023 | $73.28 |
| Apr 2023 | $79.45 |
| May 2023 | $71.58 |
| Jun 2023 | $70.25 |
| Jul 2023 | $76.07 |
| Aug 2023 | $81.39 |
| Sep 2023 | $89.43 |
| Oct 2023 | $85.64 |
| Nov 2023 | $77.69 |
| Dec 2023 | $71.90 |
| Jan 2024 | $74.15 |
| Feb 2024 | $77.25 |
| Mar 2024 | $81.28 |
| Apr 2024 | $85.35 |
| May 2024 | $80.02 |
| Jun 2024 | $79.77 |
| Jul 2024 | $81.80 |
| Aug 2024 | $76.68 |
| Sep 2024 | $70.24 |
| Oct 2024 | $71.99 |
| Nov 2024 | $69.95 |
| Dec 2024 | $70.12 |
| Jan 2025 | $75.74 |
| Feb 2025 | $71.53 |
| Mar 2025 | $68.24 |
| Apr 2025 | $63.54 |
| May 2025 | $62.17 |
| Jun 2025 | $68.17 |
| Jul 2025 | $68.39 |
| Aug 2025 | $64.86 |
| Sep 2025 | $63.96 |
| Oct 2025 | $60.89 |
| Nov 2025 | $60.06 |
| Dec 2025 | $57.97 |
| Jan 2026 | $60.04 |
| Feb 2026 | $64.51 |
| Mar 2026 | $91.38 |
| Apr 2026 | $100.32 |
| May 2026 | $102.13 |
| Jun 2026 | $84.81 |
| Jul 2026 | $80.46 |
| Aug 2026 | $83.90 |
| Sep 2026 | $97.31 |
Positive and normative economics
Section titled “Positive and normative economics”Positive economics describes what is: how the world works, what causes what, what a policy will do. A positive statement can be tested against data, and it can be wrong. Normative economics concerns what should be. A normative statement rests on a value judgment, often about the trade-off between efficiency (the size of the economic pie) and equity (how the pie is divided), and data alone cannot settle it. Classify a statement by its form, not by whether it is true:
| Statement | Type |
|---|---|
| A 10 percent rise in the minimum wage reduces teenage employment by 2 percent. | Positive (testable, possibly false) |
| Alberta’s minimum wage should rise to $18 an hour. | Normative |
| Employment Insurance benefits lengthen unemployment spells. | Positive |
| Immigration policy should favour workers with skills in short supply. | Normative |
The tools of labour economics answer positive questions. Policy debates over minimum wages, immigration and Employment Insurance also need normative judgments about whose welfare counts and by how much; economics can state the trade-off but not choose the answer.
Common mistakes
Section titled “Common mistakes”Check yourself
Section titled “Check yourself”Building a pipeline in a remote region creates thousands of temporary construction jobs. In the short run, before workers can move to the region, what does the supply and demand model predict for the region's construction labour market?
Which statement is a positive statement?
In the market for engineers, labour demand is and labour supply is , where is the annual salary in thousands of dollars and is thousands of engineers. What is the equilibrium salary, in thousands of dollars?
Sources
Section titled “Sources”-
Government of Canada, Minimum Wage Database, General hourly minimum wage rates in Canada since 1965. ↩
-
Statistics Canada, Table 14-10-0129-01, Union status by geography. Coverage rate: employees who are union members or covered by a collective agreement, annual average, 10 provinces. ↩
-
ConocoPhillips Alaska, Trans-Alaska Pipeline System (TAPS). ↩
-
Robinson, D., Fried, N., Windisch-Cole, B. and Gilbertsen, N. (2005). Two-year forecast: Growth to continue. Alaska Economic Trends, May 2005, Alaska Department of Labor and Workforce Development. PDF. ↩
-
Carrington, W. J. (1996). The Alaskan labor market during the pipeline era. Journal of Political Economy, 104(1), 186 to 218. doi:10.1086/262022. ↩
-
Robinson, D. (2025). Alaska first for seasonal job swing. Alaska Economic Trends, December 2025, 11 to 12. PDF. ↩
-
Marchand, J. (2012). Local labor market impacts of energy boom-bust-boom in Western Canada. Journal of Urban Economics, 71(1), 165 to 174. doi:10.1016/j.jue.2011.06.001. ↩