Institute of Economics 520 G

Labour Economics Prof. Dr. Thomas Beißinger 

Team Prof. Dr. Thomas Beißinger Chair of Labour and Service Economics Lectures in:  Labour Economics 1: Topics in Advanced Labour Economics  Labour Economics 2: Labour Markets and the Macroeconomy Supervision of seminar papers and master theses Martyna Marczak Research assistant Tutorials in:  Labour Economics 1: Topics in Advanced Labour Economics  Labour Economics 2: Labour Markets and the Macroeconomy Supervision of seminar papers and master theses  TEAM  OBJECTIVES  LABOUR ECONOMICS 1  LABOUR ECONOMICS 2  SEMINAR 

Objectives of the module  An application of microeconomics, macroeconomics and econometrics to labour market issues  The module creates a strong link to the recent research in the field of labour economics  Students acquire the ability to understand and interpret labour market models and empirical approaches in labour economics.  The curriculum combines the analysis of theoretical concepts with the possibility of an empirical application in the seminar papers or master theses  „Labour Economics“ is an ideal complement to such courses as: „Money and Employment“, „International Trade“, „Public Finance“ and „Econometrics“  TEAM  OBJECTIVES  LABOUR ECONOMICS 1  LABOUR ECONOMICS 2  SEMINAR 

Labour Economics 1: Topics in Advanced Labour Economics  TEAM  OBJECTIVES  LABOUR ECONOMICS 1  LABOUR ECONOMICS 2  SEMINAR  1.The Theory of Labour Supply  The basic model: budget constraint; preferences; analysis of the labour supply decision; labour market participation; reservation wage; supplied working hours  Effect of unemployment insurance, taxes or wage subsidies on labour supply  Extensions: household production, family models and intertemporal labour supply 2.The Econometrics of Labour Supply  Ingredients of a labour supply equation  Guide to estimating labour supply  Measurement problems  Nonlinear budget constraints  Natural experiments

Labour Economics 1: Topics in Advanced Labour Economics (cont´d)  TEAM  OBJECTIVES  LABOUR ECONOMICS 1  LABOUR ECONOMICS 2  SEMINAR  3.Job Search  Basic job search theory: search process and reservation wage; comparative statics of the basic model; choice among nonparticipation, job-seeking and employment  Extensions: eligibility and unemployment; on-the-job-search; endogeneous search effort  The equilibrium search model and the theory of optimal unemployment insurance  Empirical aspects of job search: hazard function; measuring unemployment insurance benefits; the determinants of unemployment duration Literature: Cahuc, P., and Zylberberg, A. (2004), Labor Economics, MIT Press, Chapters 1 and 3 Type of examination: written exam Points: 6 EP

Labour Economics 2: Labour Markets and the Macroeconomy  TEAM  OBJECTIVES  LABOUR ECONOMICS 1  LABOUR ECONOMICS 2  SEMINAR  1.Job Reallocations and Unemployment  Empirical evidence on job flows and worker flows  The matching model: the matching function; the Beveridge curve; behaviour of firms; behaviour of workers; labour market equilibrium; out-of-stationary-state dynamics 2.Labour Unions  Utility function and behaviour of labour unions  General equilibrium: explanation of unemployment  Extensions: Nash bargaining; the impact of taxes on collective bargaining  Degree of centralization of wage bargaining: the Calmfors-Driffill hypothesis  Insiders and Outsiders: insiders and the persistence of unemployment; labour market segmentation  Empirical evidence regarding the consequences of collective bargaining

Labour Economics 2: Labour Markets and the Macroeconomy (cont´d)  TEAM  OBJECTIVES  LABOUR ECONOMICS 1  LABOUR ECONOMICS 2  SEMINAR  3.Efficiency Wages  Partial equilibrium: a simple model  The causes of efficiency wages  Empirical evidence  Efficiency wages in a macroeconomic framework: explanation of involuntary unemployment Literature: Cahuc P., and Zylberberg A. (2004), ), Labor Economics, MIT Press, Chapter 9; some parts of Chapter 7 Sorensen P. B., and Whitta-Jacobsen, H. (2005), Introducing Advanced Macroeconomics, Chapters 12 and 13 Type of examination: written exam Points: 6 EP

Seminar  TEAM  OBJECTIVES  LABOUR ECONOMICS 1  LABOUR ECONOMICS 2  SEMINAR  Examples of topics in previous seminars and master theses: Adverse selection and the labour market Efficiency wages and dual labour markets The relationship between inequality and economic growth Optimal contracting and CEO compensation The labour market consequences of immigration: theory and empirical evidence for Germany Health, health insurance and the labour market The economic analysis of labour market discrimination Participants are also encouraged to make their own suggestions on the preferred topic, upon consultation with the supervisor Schedule: presentations take place as a block seminar Points: 6 EP