Labour Market Economics Essay Example

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The Becker Model with Unemployment

ecker’s model argue that as far as standard static models of fertility patterns are concerned, parents are likely to maximise a utility function that however, will be dependent on quality-adjusted child quantity as well as other aspects of consumption. However, Becker insinuates that such consumptions will be subject to family budget constraint (Labour Market EconomicsBBecker & Hills 1980).

Source: Douglass (2010)

During the years 1980 across to the year 1990 the rates of unemployment was at its peak in Australia, a state that provides an explanation that relates to high population of those who invested in education for many years. According to Barr and Turner (2013) the estimation of the income ratio between higher education degree holders and high scholars for different years increased over the years of bad economy (1980s to mid1990s) at the range of between 1.76 to 1.96 for men and between 1.27 to 1.79 for ladies but eventually reduced during the good economic years of mid 1990s to 1.64 and 1.65 for men and women accordingly.

Relating this figure to the model, it is apparent that university enrolments usually increase in recessions because permanent changes in income, wages and the price of children are likely to cause income as well as effects on substitution that alters decisions on taking children for higher education as quest for financial stability increases due to the recession (Callan 2002). High recession has a lot of impacts on both the needs and supply in higher education. The higher learning institutions have realized reduction in the resources of revenue as far as supply is concerned (Mitchell et al. 2014).


Barr, A., & Turner, S. E. (2013). Expanding enrollments and contracting state budgets: The effect of the Great Recession on higher education. The ANNALS of the American Academy of Political and Social Science, 650(1), 168-193.

Becker, B. E., & Hills, S. M. (1980). Teenage unemployment: Some evidence of the long-run effects on wages. Journal of Human Resources, 354-372.

Callan, P. M. (2002). Coping with Recession: Public Policy, Economic Downturns and Higher Education.

Douglass, J. A. (2010). Higher education budgets and the global recession: Tracking varied national responses and their consequences. Center for Studies in Higher Education.

Mitchell, M., Palacios, V., & Leachman, M. (2014). States are still funding higher education below pre-recession levels. Center on Budget and Policy Priorities, 5(1), 14.