ABSTRACT
The research methodology employed by labour economists is Shared with all social scientists. The first step in a research programme is to define interesting and important aspects of the labour market to the researcher. Using data collected by the government or by the researcher the coefficients of each equation are ‘estimated’ by various statistical techniques. Estimation techniques used in applied economics are becoming increasingly sophisticated. The size of the empirical literature on labour economics is growing very rapidly indeed. The scientific approach sometimes makes the labour market analysis complex, but also perhaps brings it closer to the real world and at the same time generates a series of relevant and testable predictions. So, for example, the basic model of labour supply involves the underlying assumption that individuals maximise utility, the theory of goods/leisure choices and the hypothesis that wage increases raise the level of labour supply.
