Labor Economics Barcelona GSE Spring 2013

The Course Instructor: Libertad González TA: Marc Goñi Evaluation Final exam (June 25), 50%. Referee report, 10%. Research proposal, 40%.

The referee report 2-3 pages with a critical assessment of a recent research paper in labor economics. In groups of 2 students. Structure: summary, recommendation, comments. Where to choose the paper from: AER, QJE, JPE, Econometrica or REStud. JoLE, JHR NBER wp in Labor Studies. Dated 2009-2013.

The project Obviously the course project will not be a finished paper. But it should represent some progress. You should have your theoretical background, your identification strategy, and some preliminary results from the empirical analysis. The in-class presentations will take place in early June, and the final written version will be due June 17. 8 pages max (1 page intro, 1 methods, 1 data, 2 results, 1 conclusions and references, 2 tables and figures).

Textbooks George Borjas, Labor Economics, McGraw Hill, 6th edition (2012). Ronald G. Ehrenberg and Robert S. Smith, Modern Labor Economics, Pearson, 11th edition (2011). Pierre Cahuc and André Zylbergerg, Labor Economics, The MIT Press (2004).

Outline of Topics Lectures 2, 3. Labor Supply. Lectures 4, 5. Labor Demand. Lectures 6, 7. Labor Market Equilibrium. Lectures 8, 9. Education and Human Capital. Lectures 10, 11. Changes in the Wage Structure. Lectures 12, 13. Labor Mobility Lectures 14, 15. Discrimination Lecture 16. Unions Lectures 17, 18. Unemployment

Goals of the course Understanding research in labor economics Being able to generate your own research in labor economics

Today’s Outline The field of Labor Economics. Overview of the labor market.

Today’s Reading List Borjas, Chapter 1 Ehrenberg & Smith, Chapters 1 & 2. Cahuc & Zylberberg, Introduction.

1. Labor Economics “Labor economics studies how labor markets work” (Borjas) “The study of the workings and outcomes of the market for labor” (Ehrenberg) “The study of the markets in which labor services are exchanged for wages” (Cahuc).

Why Do We Study Labor Economics? Income earned by working is a large fraction of total income. Most of the population are wage-earners. Many social policy issues concern the labor market experience of certain workers or the employment relationship between workers and firms.

A Brief History of the Discipline Adam Smith. Labor Economics as an autonomous discipline, US 1940’s. Profound transformation in the last 3 decades of the 20th century. Labor Economics today. Theory, testable implications, empirical analysis.

2. Overview of the Labor Market Agents: workers and firms (and government). Households. Households decide how much labor to supply. Firms. Firms decide where, what and how much to produce, and whom to hire. The labor market allocates workers to jobs and coordinates employment decisions. See Chapter 2 of Ehrenberg & Smith for an overview of demand, supply and equilibrium.

Terminology Employment, unemployment, labor force participation Wages, earnings, income