EC3311 Labour Economics



Download 127.83 Kb.
Date03.03.2018
Size127.83 Kb.
#40290


EC3311 Labour Economics
Lecturers: Professor Andrew Seltzer, Fall Term; Dan Anderberg, Spring Term
Andrew Seltzer Dan Anderberg

Office: Horton H301 Horton H218

Phone: 443475 414082

E-Mail: a.seltzer@rhul.ac.uk Dan.Anderberg@rhul.ac.uk

Consultation hours: TBA TBA

Course Overview: This is a full year course examining the economic issues of labour markets. The first term will focus primarily on the demand side of labour markets, i.e. the behaviour of firms when hiring, compensation, promoting, monitoring their workers. The second term, taught by Dr. Dan Anderberg, will focus more on labour supply and institution aspects of the labour market.

Course Delivery: The course will be delivered through a one-hour lecture and a one-hour seminar each week. Seminars will be based upon worksheets distributed in the previous week’s lecture. The lecturers will available for consultation during advertised office hours or by appointment. Lecture notes will be available on the web.

Course Assessment: A three-hour unseen exam for this course will be given during the summer term and will count for the entire mark. The exam will test your knowledge and understanding of the material covered in the course. You will be required to demonstrate an understanding of important debates within labour economics and the techniques used to analyse the issues contained in these debates.


Formative assessment will consist of a one-hour unseen test and an assignment each term. The dates for these assessments are listed in the student handbook. Students are required to regularly attend seminars and seriously attempt at least three of the four pieces of formative assessment in order to sit the final exam. The assignments are included at the end of this syllabus.
Learning Outcomes
Upon completion of the course students should:
♦ Understand the basic theoretical models of labour economics

♦ Understand the underlying empirical approaches used to evaluate these models

♦ Be able to apply the models to current policy debates and to firms personnel

practices

♦ To be able to read journal articles and understand the main issues presented

The primary text for the course will be Ronald Ehrenberg and Robert Smith, Modern Labor Economics, Nineth Edition, New York: HarperCollins, 2005. Hereafter this will be referred to as E & S. The secondary text is Borjas, Labor Economics, 2nd Edition, McGraw-Hill . In addition there will be assigned readings from various journals. These articles will tend to be somewhat technical, and although you may not fully understand the techniques, it is important to understand the main issues being addressed by these articles. Most of these articles will be available online at UK – JSTOR (http://uk.jstor.org/cgi-bin/jstor/listjournal?frame=noframe#Economics). Articles marked with an asterisk (*) are available on-line. All other materials will be available on short-reserve at the library.




AUTUMN TERM


  1. Introduction (week 1)




  1. Labour Demand: Who to hire and what to pay, Quasi-fixed costs, technological change, foreign trade (weeks 1-3)

Readings: E & S, Chapter 3, 4, 5


*David Card and Alan Krueger, “Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania,” American Economics Review, 84, 1994, pp. 772-93.
*David Neumark and William Wascher, " Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Comment." American Economics Review, 90 (December 2000), pp. 1362-97.
*George Johnson, “Changes in Earnings Inequality: The Role of Demand Shifts”, Journal of Economic Perspectives, 11, 1997, pp. 41-54.
*John E DiNardo and Jorn-Steffen Pischke, “The Returns to Computer Use Revisited: Have Pencils Changed the Wage Structure Too?” Quarterly Journal of Economics, 112, 1997, pp. 291-303.


  1. Labour Supply: The Decision to Work (week 4)

Readings: E & S, Chapter 6


Mark Killingsworth, Labor Supply, New York: Cambridge University Press, 1993, chapter 1, “The Simple Static Model of Labor Supply”, pp. 1-28.
Richard Blundell, “Welfare-to-Work: Which Policies Work and Why?” Keynes Lecture in Economics, 2001, http://www.ifs.org.uk/conferences/keynes2001.pdf



  1. Compensating Wage Differentials (week 5)

Readings: E & S, Chapter 8


*Charles Brown, “Equalizing Differences in the Labor Market,” Quarterly Journal of Economics, 94, 1980, pp. 113-34.
*Robert Smith, “Compensating Wage Differentials and Public Policy: A Review,” Industrial and Labor Relations Review, 32, 1979, pp. 339-52.


  1. The Returns to Education and Training: Human Capital and Signalling (weeks 6 and 7)

Readings: E & S, Chapter 9


*Paul Miller, Charles Mulvey, and Nick Martin, "What do Twins Studies Reveal About the Economic Returns to Education?: A Comparison of Australian and US Findings", American Economic Review, 85, 1995, pp.586-599.
*George Psacharopoulos, “Returns to Education: A Further International Update and Implications,” Journal of Human Resources, 20, 1985, pp. 583-604.
*Andrew Weiss, "Human Capital vs. Signalling Explanations of Wages," The Journal of Economic Perspectives 9:4 (Fall 1995), 133-154.


  1. Pay and Productivity: The Principal Agent Relationship, Bonuses, Piece rates, Deferred Compensation, Tournaments (weeks 8-10)

Readings: E & S, Chapter 11


Edward Lazear, Personnel Economics, Cambridge, MA: MIT Press, 1995, chapter 3, “Relative Compensation”, pp. 25-38 and chapter 4, “Work-Life Incentive Schemes”, pp. 39-46.
*Edward Lazear, “Performance Pay and Productivity”, American Economic Review, 90 (December 2000), 1346-1361.
*Canice Prendergast, “The Provision of Incentives in Firms”, Journal of Economic Literature, 37, 1999, pp. 7-63.
*George Baker, Michael Gibbs, and Bengt Holmstrom, “The Wage Policy of a Firm”, Quarterly Journal of Economics, 99, November 1994, 921 - 55.
*Andrew Seltzer and David Merrett, “Personnel Practices at the Union Bank of Australia: Panel Evidence from the 1887-1900 Entry Cohorts”, Journal of Labor Economics, 18, October 2000, pp. 573-613.
SPRING TERM
Lectures
Lecture 1: Unemployment- Introduction (Figs)
Reading:

Layard, R., Nickell, S. & Jackman, R. (1991), Unemployment: Macroeconomic Performance and the Labour Market, Oxford University Press, Oxford.

Lecture 2: Efficiency Wages (Figs)
Reading:

Akerlof, G. (1982), ‘Labor contracts as partial gift exchange’, Quarterly Journal of Economics 87, 543– 569.


Akerlof, G. & Yellen, J. (1986), E¢ciency Wage Models of the Labor Market, Cambridge University Press, Cambridge.
Blanch‡ower, D. G. & Oswald, A. J. (1994), The Wage Curve, MIT Press, Cambridge MA.
Bosworth, D., Dawkins, P. & Stromback, T. (1996), The Economics of the Labour Market, Addison Wesley Longman.
Card, D. (1994), ‘The wage curve: A review’, Journal of Economic Literature 33, 285–299.
Krueger, A. (1991), ‘Ownership, agency, and wages: An examination of franchising in the fast-food industry’, Quarterly Journal of Economics 106, 75–101.
Krueger, A. & Summers, L. (1988), ‘E¢ciency wages and the inter-industry wage structure’, Econometrica 56, 259–293.
Layard, R., Nickell, S. & Jackman, R. (1991), Unemployment: Macroeconomic Performance and the Labour Market, Oxford University Press, Oxford.
Ra¤, M. G. & Summers, L. (1987), ‘Did Henry Ford pay e¢ciency wages?’, Journal of Labor Economics 5, S57–S86.
Shapiro, C. & Stiglitz, J. (1984), ‘Equilibrium unemployment as a worker discipline device’, American Economic Review 74, 433–444.
Solow, R. M. (1979), ‘Another possible source of wage stickiness’, Journal of Macroeconomics 1, 79–82.

Lecture 3: Unions (Figs)


Reading:

Booth, A. L. (1995), The Economics of the Trade Union, Cambridge University Press, Cambridge.


Bosworth, D., Dawkins, P. & Stromback, T. (1996), The Economics of the Labour Market, Addison Wesley Longman.
Layard, R. & Nickell, S. (1985), ‘The causes of british unemployment’, National Institute Economic Review 111, 62–85.
Layard, R. & Nickell, S. (1986), ‘Unemployment in Britain’, Economica 53, S121–170.
Layard, R., Nickell, S. & Jackman, R. (1991), Unemployment: Macroeconomic Performance and the Labour Market, Oxford University Press, Oxford.
Lindbeck, A. & Snower, D. (2001), ‘Insiders versus outsiders’, Journal of Economic Perspectives 15, 165– 188.
MacDonald, I. M. & Solow, R. M. (1981), ‘Wage bargaining and employment’, American Economic Review 71, 896–908.
Oswald, A. (1985), ‘The economic theory of trade unions: An introductory survey’, The Scandinavian Journal of Economics 87, 160–193.
Smith, S. W. (1994), Labour Economics, Routledge, London.
Stewart, M. (1990), ‘Union wage di¤erentials, product market in‡uences and the division of rents’, Economic Journal 100, 1122–1137.
Ulph, A. & Ulph, D. (1990), Union bargaining: A survey of recent work, i n D. Sapsford & Z. Tzannatos, eds, ‘Current Issues in Labour Economics’, MacMillan, London.

Lecture 4: Unemployment Insurance (Figs)


Reading:

Atkinson, A. B. & Micklewright, J. (1991), ‘Unemployment compensation and labor market transition: A critical review’, Journal of Economic Literature 29, 1679–1727.


Davidson, C. & Woodbury, S. (1997), ‘Optimal unemployment insurance’, Journal of Public Economics 64, 359–387.
Ehrenberg, R. & Oaxaca, R. (1976), ‘Unemployment insurance, duration of unemployment, and subsequent wage gain’, American Economic Review 66, 754–766.
Gruber, J. (1997), ‘The consumption smoothing bene…ts of unemployment insurance’, American Economic Review 87, 192–205.
Holzer, H. (1987), ‘Informal job search and black youth unemployment’, American Economic Review 77, 446–452.
Katz, L. & Meyer, B. (1990a), ‘The impact of the potential duration of unemployment bene…ts on the duration of unemployment’, Journal of Public Economi cs 41, 45–72.
Katz, L. & Meyer, B. D. (1990b), ‘Unemployment insurance, recall expectations, and unemployment outcomes’, Quarterly Journal of Economics 105, 973–1002.
Machin, S. & Manning, A. (1998), ‘The causes and consequences of long-term unemployment in europe’. http://cep.lse.ac.uk/pubs/download/dp0400.pdf.
Meyer, B. D. (1995), ‘Lessons from the u.s. unemployment insurance experiment’, Journal of Economic Literature 33, 91–131.
Smith, S. W. (1994), Labour Economics, Routledge, London.
Woodbury, S. & Spiegelman, R. (1987), ‘Bonuses to workers and employers to reduce unemployment: Randomized trials in illinois’, American Economic Review 77, 513–530.
Lecture 5: Active Labour Market Policy (Figs)
Reading:

Blundell, R., Dias, M. C. & Meghir, C. (2001), ‘Evaluating the employment impact of a mandatory job search assistance program’. The Institute f or Fiscal Studies WP01/20.


Calmfors, L. (1994), ‘Active labour market policy and unemployment: A framework for the analysis of crucial design features’, OECD Economic Studies 22, 7–47.
Calmfors, L., Forslund, A. & Hemström, M. (2001), ‘Does active labour market policy work? Lessons from the Swedish experiences’, Swedish Economic Policy Review 85, 61–124.
Nickell, S. & Layard, R. (1999), Labour market instititions and economic performance, in O. Ashenfelter & D. Card, eds, ‘Handbook of Labor Economics Vol. 3C’, Elsevier Science B.V., Amsterdam.
Reenen, J. V. (2001), ‘No more skivvy schemes? active labour market policies and the British New Deal for young unemployed in context’. The Institute for Fiscal Studies WP01/09.
Scarpetta, S. (1996), ‘Assessing the role of labour market policies and institutional settings on unemployment: A cross-country study’, OECD Economic Studies 26, 43–98.
Sianesi, B. (2002), ‘Swedish active labour market programmes in the 1990s: Overall e¤ectiveness and di¤erential performance’. The Institute for Fiscal Policy WP02/03.

Lecture 6: MID-TERM CLASS TEST

Lecture 7: The Rise in Inequality (Figs)
Reading:

Bound, J. & Johnson, G. (1992), ‘Changes in the structure of wages in the 1980’s: An evaluation of alternative explanations’, American Economic Review 82, 371–392.


Card, D. & DiNardo, J. E. (2002), ‘Skill biased technological change and rising wage inequality: Some problems and puzzles’. NBER Working Paper No 8769.
Card, D., Kramarz, F. & Lemieux, T. (1999), ‘Changes in the relative structure of wages and employment: A comparison of the United States, Canada, and France’, Canadi an Journal of Economics 32, 843– 877.
Card, D., Lemieux, T. & Riddell, W. C. (2003), ‘Unionization and wage inequality: A comparative study of the U.S., U.K., and Canada’. NBER Working Paper No. 9473.
Fortin, N. & Lemieux, T. (1997), ‘Institutional changes and rising wage inequality: Is there a link?’, Journal of Economic Perspectives 11, 75–96.
Gottschalk, P. (1997), ‘Inequality, income growth, and mobility: The basic facts’, Journal of Economic Perspectives 11, 21–40.
Jenkins, S. P. (1996), ‘Recent trends in the UK income distribution: What happened and why?’, Oxford Review of Economic Policy 12, 29–46.
Nickell, S. & Bell, B. (1996), ‘Changes in the distribution of wages and unemployment in the OECD countries’, American Economic Review 86, 302–308.

Lecture 8: Job Turnover and Income Mobility (Figs)


Reading:

Altonji, J. G. & Shakotko, R. A. (1987), ‘Do wages rise with seniority?’, Review of Economic Studies 54, 437–459.


Atkinson, A. B., Bourguignon, F. & Morrison, C. (1992), Empirical Studies of Earnings Mobility, Harwood Academic Publishers, Reading.
Booth, A. L., Francesconi, M. & Garcia-Serrano, C. (1999), ‘Job tenure and job mobility in Britain’, Industrial and Labor Relati ons Review 53, 43–70.
Burkhauser, R. V., Holtz-Eakin, D. & Rhody, S. E. (1997), ‘Labor earnings mobility and inequality in the United States and Germany during the growth years of the 1980s’. NBER Working Paper No. 5988.
Farber, H. S. (1999), Mobility and stability: The dynamics of job change in labor markets, in O. Ashenfelter& D. Card, eds, ‘Handbook of Labor Economics Vol. III’, Elsevier Science, Amsterdam.
Jarvis, S. & Jenkins, S. P. (1997), ‘Low income dynamics in 1990s Britain’, Fiscal Studies 18, 123–142.
Jarvis, S. & Jenkins, S. P. (1998), ‘How much income mobility is there in Britain?’, Economic Journal 108, 428–443.
Stewart, M. B. & Swa¢eld, J. (1999), ‘Low pay dynamics and transition probabilities’, Economica 66, 23–42.

Lecture 9: Intergenerational Social Mobility (Figs)


Reading:

Becker, G. S. (1991), A Treatise on the Family, 2’nd edn, Harvard University Press, Cambridge, Mass.


Becker, G. & Tomes, N. (1986), ‘Human capital and the rise and fall of families’, Journal of Labor Economics 107, S1–S39. Reprinted in Becker (1991).
Björklund, A. & Jäntti, M. (1997), ‘Intergenerational income mobility in Sweden compared to the United States’, Ameri can Economic Revi ew 87, 1009–1018.
Blanden, J., Goodman, A., Gregg, P. & Machin, S. (2002), ‘Changes in intergenerational mobility in Britain’. Mimeo, University College London.
Blanden, J., Gregg, P. & Machin, S. (2002), ‘Education and family income’. Mimeo, University College London.
Carneiro, P. & Heckman, J. J. (2002), ‘The evidence on credit constraints in post½ Usecondary schooling’, Economic Journal 112, 705–734.
Dearden, L., Machin, S. & Reed, H. (1997), ‘Intergenerational mobility in Britain’, Economic Journal 107, 47–64.
Mulligan, C. B. (1997), Parental Priorities and Economic Inequality, The University of Chicago Press, Chicago.
Solon, G. (1999), Intergenerational mobility in the labor market, in O. Ashenfelter & D. Card, eds, ‘Handbook of Labor Economics’, North-Holland, Amsterdam.
Lecture 10: Marriage and Divorce (Figs)
Reading:

Becker, G. S. (1991), A Treatise on the Family, 2’nd edn, Harvard University Press, Cambridge, Mass.


Cubeddu, L. & Rios-Rull, J. V. (2002), ‘Families as shocks’. Available at

http://www.econ.upenn.edu/ vr0j/papers/papven.pdf.


Mare, R. D. (1991), ‘Five decades of educational assortative mating’, American Sociological Review 56, 15–32. In JStor under Sociology.
Mayer, S. (1997), What Money Can’t Buy, Harvard University Press.

Seminars
Seminar 1: Unemployment - Introduction

We will meet and discuss the following questions:

· "Unemployment is high because real wages are too high''. Discuss.

· Discuss problems in defining and measuring unemployment.

· "There are always some vacancies, so any unemployment must be voluntary''. Discuss

· Explain the distinction between stocks and flows. How can different flow-levels generate the same level of unemployment?

 

Seminar 2: Efficiency Wages

Topic: Evidence on Efficiency Wages

Paper to be presented:.

· Krueger, A.B. (1991) Ownership, Agency, and Wages: An Examination of Franchising in the Fast-Food Industry. Quarterly Journal of Economics 106, 75-101.

 

Seminar 3: Unions

Topic: Effect of Unions

Papers to be presented:

· Booth, A. (1995), "The Economics of the Trade Union", Cambridge University Press,


Chapter 6: Empirical Estimates of the Union Wage Differential.

 

Seminar 4: Unemployment Insurance

Topic: Unemployment Insurance and the Duration of Unemployment

Papers to be presented

· Woodbury, S. & Spiegelman, R. (1987), ‘Bonuses to workers and employers to reduce unemployment: Randomized trials in illinois’, American Economic Review 77, 513–530.

 

Seminar 5: Active Labour Market Policy

Topic: The New Deal

Papers to be presented

· Van Reenen, J. (2001), No More Skivvy Schemes? Active Labour Market Policies and the British New Deal for Young Unemployed in Context. The Institute for Fiscal Studies WP01/09.
Seminar 6: Inequality

Topic: Changes in the UK Income Distribution during the 1980s

Paper to be presented

· Jenkins S.P. (1996), Recent Trends in the UK Income Distribution: What Happened and Why? Oxford Review of Economic Policy 12, 29-46.

 

Seminar 7: Inequality and Institutional Changes

Topic: The impact of the decline in the real value of the minimum wage and of the decline in unionization on wage inequality.

Paper to be presented

· Fortin, N.M. and T. Lemieux (1997) Institutional Change and Rising Wage Inequality: Is there a Link? Journal of Economic Perspectives 11, 75-96.

 

Seminar 8: Low income dynamics in 1990s Britain

Topic: Low income dynamics in 1990s Britain

Papers to be presented

· Jarvis, S. and S. Jenkins (1997) Low income dynamics in 1990s Britain. Fiscal Studies 18, 123-142.

 

Seminar 9: Intergenerational Social Mobility

Topic: Has intergenerational social mobility in Britain changed over the recent decades?

Papers to be presented

· Blanden, J., A. Goodman, P. Gregg and S. Machin, (2002)  Changes in Intergenerational Mobility in Britain, Mimeo, University College London, available at: http://158.143.98.51/~machin/pdf/ig%20may%202002%20final%20version.pdf



Essay topics

As part of the formative assessment for this course you are required to write an essay of approximately 2000 words. These are not a research essays, but you may need to do more reading than simply those assigned below. As the topics have generated much controversy, it is important that you demonstrate an understanding of the methodologies used by labour economists, and not just provide an ‘answer’. The details of the assignment are outlined below.


Deadlines: The deadlines for these assignments are noted in the Student Handbook All essays must be submitted at the department office. Failure to submit 3 of the four pieces of assessed work can result in your being barred from the course exam in May. Applications for extensions can only be made to the academic coordinator, Nalini Vittal.
Presentation: Essays should be approximately 1500 words and no more than 2000 words. Students are encouraged to provide up to five graphs, tables, etc. No handwritten essays will be accepted. Please staple the essay rather than using a plastic cover (this is easier for me and is cheaper and more environmentally friendly).
Marking criteria: The Department Standardised Feedback Form lists the following criteria: knowledge of factual material, quality of application of concepts, mastery of mathematical methods, clarity of explanation, presentation, evidence of wider reading and research. In most cases mastery of mathematical methods will not be applicable to this essay. The other criteria are applicable, although clearly knowledge of factual material will obviously be more heavily weighted than presentation.

Autumn Essay topic:


What are the two main empirical approaches that labour economists use to evaluate the employment effect of minimum wage laws? What have they concluded about the employment effects of the minimum wage using these approaches? What are the advantages and disadvantages of these approaches?
Suggested Readings:
Charles Brown, “Minimum Wage Laws: Are They Overrated?”, Journal of Economic Perspectives, 2 (1988): 133-47.
Charles Brown, Curtis Gilroy, and Andrew Kohen, "The Effect of the Minimum Wage on Employment and Unemployment", Journal of Economic Literature 20 (June 1982): 487-528.
David Card and Alan Krueger, “Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania,” American Economics Review, 84, 1994, pp. 772-93.
David Neumark and William Wascher, " Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Comment." American Economics Review, 90 (December 2000), pp. 1362-97.
David Card and Alan Krueger, “Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Reply” American Economics Review, 90 (December 2000), pp.1397-1420.

Spring Essay topic:


"The New Deal has helped more than 440,000 long-term jobseekers move into work and has led to the virtual elimination of long-term youth unemployment. But again, this success is underpinned by maintaining regular contact with the jobs market and continual job-search, particularly during the Gateway stage, which evaluation evidence suggests is one of the most effective elements of the New Deal.'' UK Employment Action Plan 2002, European Commission, Employment and Social Affairs.


Discuss the effects of the New Deal for Young People.


 

· How can it be quantified?

· What features of its design can be expected to have contributed to its success?
 

Some useful reading include...



Van Reenen, J. (2001), “No More Skivvy Schemes? Active Labour Market Policies and the British New Deal for Young Unemployed in Context”, The Institute for Fiscal Studies WP01/09

This paper can be downloaded from the webpage of the the IFS at

http://www.ifs.org.uk/workingpapers/wplist.shtml

Calmfors, L., A. Forslund and M. Hemstrom, “Does active labour market policy work? Lesons from the Swedish experiences” (SECTION 2 outlining theoretical aspects). Swedish Economic Policy Review Volume 8 No 2.

This paper can be downloaded from the homepage of the journal at http://www.ekradet.konj.se/sepr/




Download 127.83 Kb.

Share with your friends:




The database is protected by copyright ©www.sckool.org 2023
send message

    Main page