Guidance on Individual Literature Review 1. What is literature review? A literature review is a critical summary of what the existing says about your specific topic or question. 2. Requirement of the...

How does population growth in the country impact labour costs?
Bloom and Freeman (1986), pages 9-13, “II Population Growth and Labor Supply” is a good example of literature review on how population growth impacts labour supply which subsequently impacts labour costs. This is derived from one of the earliest neoclassical theories- the classic volume by Coale and Hoveer (1958) highlighting the relationship between population and labour force. This theory posits that population growth due to high fertility generally tends to produce a lagged effect of 20 to 25 years to have a substantial impact on the supply of labour. They have also reviewed recent developments in the migration literature by Stark and Bloom (1985) and See Williamson (1986). On the contrary, if the population growth is the result of migration of inbound people, the effect on labour supply and hence labour costs will not be that lagged since the predominant age group of migrants is beyond teenage which is considered appropriate to enter the labour force. This effect is more pronounced in developed countries compared to developing countries, but population growth resulting from an excess of births over deaths in rural portions of an economy may create pressures for migration to urban areas within the same country. The supply will increase proportionately to the number of migrants with working age and the labour costs will decrease by the same proportion. Another theory that they have examined is the comparative impact of increase in fertility and decline in mortality on the supply of labour. Population growth due to an increase in fertility will result in a more steeply sloped age distribution and a higher dependency burden but population growth due to a mortality decline produces the same effect but to a lesser degree. This point has been illustrated by two West model stable populations presented in McNicoll (1984). Where one population had a birth rate of 4.5% and a death rate of 2.0%, the other population had a birth rate of 3% and a death rate of 0.5%. Despite having identical rates of increase the first population had 54% while the second population has 57% between the ages 15 and 64. So the supply of labour will be slightly more in the second population and costs will be less.
The literature review on wage inequality as a result of immigrants provided by Friedberg and Hunt (1995) in pages 16-17 is an excellent example of literature review on how population growth driven by immigration impacts labour costs. It critically highlights the constraints as the results downplay the negative impact of less average wage of foreign unskilled workers and that unskilled natives are better substitutes of each other. Still existing literature on time-series data for the United States from 1967–1987 by Borjas, Freeman, and Katz (1992) showed that a 1 percentage point increase in the proportion of migrants reduced the average wage of native high school dropouts by a maximum of 1.2% in the 1980s.
How does level of education impact labour costs?
Goldberg and Smith (2007), presents a staggered literature review on how education impacts labour costs. Reviewing the analysis by Kane and Rouse (1995), they evaluate the impact of education of number of college years measured in college credits on the earnings potential which in turn is the labour costs. The earning potential of a four-year college graduate is increased by 5.6% as compared to the earning potential of a two-year college graduate. They critically examine the classic model of Jacob Mincer (1958, 1974) and...