Nature of labour market analysis

Labor Economics

The course will cover the main topics in labor economics. The stress will be given to empirical approaches to answer basic questions in the area, with the basic theoretical frameworks serving to lay ground for empirical models.

Requirements: There is no textbook for the course, and the compulsory reading list consists of a number of surveys from Handbook of Labor Economics, and a set of papers providing important examples of relevant analysis. The estimated reading load is one survey plus 2 papers per week.

There will be 3 problem sets, distributed in the end of week and to be handed in to the teaching assistant in sections a weak later.

Additionally, there will be a project aimed to master your knowledge on theory as applied to empirical estimation using data on Russian labor market. Everybody will have to choose a topic from a list of 5-6 topics, create a team of 2-3 people, conduct a short research, describe results in a written form and present them on one of the seminars.

There will be a final exam given at the end of the module. Problem sets will comprise 20% of the final grade, research project - another 20%, and the exam will account for 60%.

Provisional Syllabus and Reading List

1. Introduction: the Nature of Labor Market Analysis; Labor Market Flows; Labor Market Developments in Selected Industrial Nations. Data and Empirical Strategies in Labor Economics. [1 lecture]

* Pencavel, John (1986), “Labor Supply of Men: A Survey” /in Ashenfelter, O. and Layard P.R.G. (eds.) Handbook of Labor Economics, Vol.1 (Amsterdam: North Holland).

* Killingsworth, Mark R., and James J. Heckman (1986), “Female Labor Supply: A Survey” /in Ashenfelter, O. and Layard P.R.G. (eds.) Handbook of Labor Economics, Vol.1(Amsterdam: North Holland).

* Angrist, Joshua D. and Alan B. Krueger (1999) “Empirical Strategies in Labor Economics” /in Ashenfelter, O. and D.Card (eds.) Handbook of Labor Economics, Vol.3A (Amsterdam: North Holland).

2. The Basic Static Labour Supply Model. Home Production and Time Allocation Models. Family Models. Empirical Analysis. [3 lectures]

* Pencavel, John (1986), “Labor Supply of Men: A Survey” /in Ashenfelter, O. and Layard P.R.G. (eds.) Handbook of Labor Economics, Vol.1 (Amsterdam: North Holland).

* Killingsworth, Mark R., and James J. Heckman (1986), “Female Labor Supply: A Survey” /in Ashenfelter, O. and Layard P.R.G. (eds.) Handbook of Labor Economics, Vol.1(Amsterdam: North Holland).

* (optional) Killingsworth, Mark R. (1983), “Labor Supply”: Chapters 1- 4 (Cambridge University Press).

* Mincer, Jacob (1962) “Labor Force Participation of Married Women,” in NBER, Aspects of Labor Economics.

* Becker, Gary (1965) “A Theory of Allocation of Time”, Economic Journal, September, pp.493-517

* Gronau, Reuben (1977) “Leisure, Home Production, and Work - the Theory of the Allocation of Time Revisited,” Journal of Political Economy, Vol.85, No.6, pp.1099-1123

* Heckman, James (1974) “Shadow Prices, Market Wages, and Labor Supply”, Econometrica, Vol.42, No.4, pp.679-94

3. Wages and Earnings. Returns to Education and to Experience. Discrimination and Segmentation [2 lectures]

* Willis, Robert J. (1986), “Wage Determinants: A Survey and Reinterpretation of Human Capital Earnings Function” /in Ashenfelter, O. and Layard P.R.G. (eds.) Handbook of Labor Economics, Vol.1, pp.45-50 (Amsterdam: North Holland)

* Weiss, Yoram (1986), “The Determination of Life Cycle Earnings: A Survey” /in Ashenfelter, O. and Layard P.R.G. (eds.) Handbook of Labor Economics, Vol.1 (Amsterdam: North Holland).

* Rosen, Sherwin (1986), “The Theory of Equalizing Differences” /in Ashenfelter, O. and Layard P.R.G. (eds.) Handbook of Labor Economics, Vol.1 (Amsterdam: North Holland).

* Topel, Robert (1991) “Specific Capital, Mobility and Wages: Wages Rise with Seniority,” Journal of Political Economy, Vol. 99, No.1, pp.145-76

* Oettinger, Gerald S. (1996) “Statistical Discrimination and the Early Career Evolution of the Black-White Wage Gap”, Journal of Labor Economics, Vol.14, No.1, pp.52-78

4. Unemployment: Incidence and Duration. Search Models. Matching Models. [3 lectures]

· Mortensen, Dale T. (1986), “Job Search and Labor Market Analysis” /in Ashenfelter, O. and Layard P.R.G. (eds.) Handbook of Labor Economics, Vol.2 (Amsterdam: North Holland)

· Mortensen, Dale T. and Christopher A. Pissarides (1999) “New Developments in Models of Search in the Labor Market” /in Ashenfelter, O. and D.Card (eds.) Handbook of Labor Economics, Vol.3B (Amsterdam: North Holland).

· Stigler, George (1962) "Information in the Labor Market," Journal of Political Economy , No.5, pp.94-105

· Nickell, Stephen (1997) "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives ,Vol.11, No.3, pp.55-74

5. Empirical Estimation of Unemployment. Duration analysis. [3 lectures]

· Kiefer, N.M. (1988) “Economic Duration Data and Hazard Functions,” Journal of Economic Literature, Vol. 26, June, pp. 646-79

· Meyer, Bruce D. (1990) “Unemployment Insurance and Unemployment Spells”, Econometrica, Vol.58, No.4, pp.757-82

· Hunt, Jennifer (1995) “The Effect of Unemployment Compensation on Unemployment Duration in Germany”, Journal of Labor Economics, Vol.13, No1, pp.88-120

· Svejnar, Jan (1999) “Labor Markets in the Transitional Central and Eastern European Economies” /in Ashenfelter, O. and D.Card (eds.) Handbook of Labor Economics, Vol.3B (Amsterdam: North Holland).

6. Governmental Interventions: Evaluation of Active Labor Market Programs [2 lectures]

· Heckman, James J., Robert J. LaLonde and Jeffrey A.Smith (1999) “The Economic and Econometrics of Active Labor Market Programs ” /in Ashenfelter, O. and D.Card (eds.) Handbook of Labor Economics, Vol.3A (Amsterdam: North Holland).

· Kluve, Jochen, Lehmann, Hartmut, and Schmidt, Cristoph M., (1999) “Active Labor Market Policies in Poland: Human Capital Enhancement, Stigmatization, or Benefit Churning?” Journal of Comparative Economics 27: 61-89

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