Download Chapter 28: Population, Labor and the Tertiary Sector

Chapter 28: Population, Labor and the Tertiary Sector
Summary
Economic prosperity occurs when increases in income and production spread throughout all sectors of
the economy. Over time, both the rich and poor in the U.S. have realized improved standards of living
and higher “income”. This chapter tracks the key changes in U.S. population and its labor force. It
draws special attention to key developments in the tertiary sector of the labor force.
Key Terms and Concepts
Derived demand
Income distribution
Paradox of tertiary employment
Primary sector
Opportunity costs
Secondary sector
Tertiary sector
Transaction costs
Teaching Tips
1. The health of the population increased along with longevity. Discuss the long-term economic
consequences in the labor force.
2. According to Hughes and Cain (2011), today’s growth in white-collar jobs is fueled by
investments in education. Unlike the distant past, finding employment does not depend heavily
on apprentice-style training or land holdings. Ask students to interpret what this means and
explain why it is useful information.
3. The premium on a college education increases when the growth in the demand for knowledge
and skilled workers outpaces the growth in supply. Ask students to illustrate by using supply
and demand curves.
4. Note that the demand for labor in the service or tertiary sector of the economy is linked to the
demand for labor in its primary and secondary sectors. So growth in those sectors fuels growth
in the tertiary sector. Ask students to explain why growth in manufacturing, processing, and
construction and in the primary production associated with growth in its tertiary sector. Now
consider how improving efficiency in the tertiary sector fuels increased productivity in the other
sectors – primary and secondary. Combine all discussions to explain the paradox of tertiary
employment.
5. There are economic consequences linked to the U.S. transfer system that takes funds from
individuals paying taxes and distributes them to targeted groups – welfare recipients, people
drawing social security, and people without health insurance. Ask students to identify these
economic consequences and debate whether they overall impact the economy positively,
negatively or neutrally.
6. Ask students to explain why, on average, unhealthy adults may earn less, spend less time in the
labor force and retire earlier than their healthy counterparts.
7. Discuss how wages were affect in the 1970s by: a) the entrance of baby boomers into the labor
force and b) less discrimination in the workplace.
Websites and Additional Resources
 United Nations Development Programme. “Statistics of the Human Development
Report.” Human Development Reports. 2009. Retrieved December 10, 2009 from:
http://hdr.undp.org/en/statistics/
o The HDI – human development index – is a summary composite index that
measures a country's average achievements in three basic aspects of human
development: health, knowledge, and a decent standard of living. Health is
measured by life expectancy at birth; knowledge is measured by a combination
of the adult literacy rate and the combined primary, secondary, and tertiary
gross enrollment ratio; and standard of living by GDP per capita (PPP US$).”
Visit the website for HDI statistics and country rankings.