Economics 751: Labor Economics I Fall 2015

Transcription

1 Economics 751: Labor Economics I Fall 2015 When and Where: Mondays and Wednesdays, 11:00 AM 12:15 PM, NWQ B-6422 Professor: Scott Drewianka ( sdrewian@uwm.edu) Office Hours (in Bolton 886): Mondays and Wednesdays, 3:30-5:00 PM **If you cannot come during the regularly scheduled office hours, please me to set up a special appointment. Course Goals: This is part of a two-course graduate sequence on labor economics that may be taken in any order. It has two main goals: to introduce a range of topics and methods in modern labor economics and to help you identify topics for your own research. Prerequisites: Economics 701 (Economic Theory: Microeconomics). No previous experience with labor economics is necessary. You may take Economics 752 first if you wish, but the two courses are designed to be taken in either order. Books: None required; readings will be available on D2L and/or JSTOR. The UWM bookstore will also stock a few optional books (see below) that may be useful for the course and beyond. Grading: Students can choose between two different methods for computing their grades. Option A is intended for Ph.D. students who are considering a specialization in labor economics and M.A. students who want to make substantial progress on their MA paper (which may subsequently be completed in Research Seminar for MA Students, Econ 790), while option B is meant for students taking the class as an elective. Option A is the default; students who prefer option B must notify the professor by September 21. Option A: Grades will be based on a midterm and final exam (25 percent each), a literature review (35 percent, including 5 for preliminary documents), the first article summary (5 percent), a presentation (5 percent), and participation (5 percent). Option B: Grades will be based on a midterm and final exam (30 percent each), a shorter lit review (15 percent), three article summaries (5 percent each), a presentation (5 percent), and participation (5 percent). Midterm: Wed., Oct. 28 Final exam: Thurs., Dec. 17, 10:00 AM - Noon [Note special day/ time.] Article Summaries: Depending on which option you choose, you will write one (option A) or three (option B) summaries of papers not discussed in class. The first paper to be summarized will be assigned to all students; the main objective of that assignment will be to understand the structure of the exposition, especially the introduction. The other summaries (to be written only by students choosing option B) will be content-oriented. Each should be roughly 3-5 pages in length and will (a) identify the topic, its significance, and its place in the broader literature; (b) summarize the methods and results; and (c) appraise the work and highlight any unanswered questions. You may write summaries of articles related to your literature review (see below). Summaries must be submitted on or before the deadlines below. Deadlines: Sept. 14, Sept. 23, and Oct. 7 Literature Review/Research Paper: Regardless of which grading option you choose, a substantial share of your grade will be determined by a research paper and an associated presentation. You will choose your own topic, but I encourage you to consult with me to ensure that it has an appropriate scope. A typical paper written under option A will be about pages long (double spaced), but there is no prescribed maximum or minimum length apart from what is dictated by the topic. Papers written under option B should be more sharply focused and shorter, perhaps around 10 pages. In any event, your paper should be both as concise as possible and as long as necessary. Most students will write a review of the existing literature on a topic in labor economics. A literature review is NOT merely a series of article summaries or book reports, but rather a well-written, integrated discussion of research in the field and possible directions for future research. Such a paper will identify the topic under discussion and its place in the broader literature, discuss its significance for public policy and/or other research, summarize the methods and contributions of several papers, describe how they relate to one another (e.g., compare and contrast their methods and results), highlight any conclusions that may be drawn, and point to questions that remain open or new techniques or data that might shed additional light on the subject. For some excellent examples of such papers, look at virtually anything published in the Journal of Economic Perspectives or any article in the Handbooks in Economics series. If you have already written a labor-related literature review in another class, you may request permission to write an original research paper on an open question identified in your earlier review. Eligible students who wish to write an original paper should contact me early in the semester. In most cases your project would be mainly empirical in nature, so you would need to obtain your data soon. Deadlines: 1. Tentative decision about topic: Sept Preliminary bibliography (10+ possible sources): Sept Preliminary outline: Nov Draft of introduction: Nov Completed paper: Dec. 14 NOTE: Students choosing option B are not required to complete the preliminary bibliography, preliminary outline, or the draft of the introduction. However, they must choose a topic by Sept. 16 and submit the paper by Dec. 14.

2 Some Policies: 1. Academic Honesty: Academic dishonesty will not be tolerated!!! All forms of cheating, including plagiarism, are serious violations of academic standards so be sure you know what constitutes plagiarism! Violators are subject to disciplinary action, which may be as severe as expulsion. For information about unacceptable behaviors and their consequences, see the following webpage: 2. Clarity: No credit will be granted for work that is unintelligible. This includes, but not exclusively, work that is illegible, incoherently organized, or poorly worded. 3. Other Departmental Policies: UWM s official policies on participation by students with disabilities, religious observances, complaint and grade appeal procedures, sexual harassment, incompletes, and other matters are available in Bolton 802 or at Students needing accommodations should contact me within the first two weeks. Expected time commitment: Class meetings and final exam: 37 hours Assignments: 10 hours Class readings and study (5 hours/week): 80 hours Research paper (research and writing): 80 hours Total across the semester 207 hours *This is merely an estimate for a typical successful student under option A and is likely to vary considerably across students. Students choosing option B can expect to spend 15 hours on assignments, but only 40 hours on the paper, for a total of 172 hours. Resources to help with your writing and/or research skills: 1. UWM Writing Center ( phone: ): Offers one-on-one assistance to generate topics, conduct research, organize ideas, develop thesis statements and revise drafts. Undergrad and grad students are welcome at any stage of the project. The Center is in Curtin 127, and there are also tutors at a satellite location in northwest corner of the East Wing of the library, 1 st floor near The Grind. 2. I also recommend John Cochrane s Writing Tips for Ph.D. Students (2005, Booth School of Business): 3. Available at the UWM bookstore: a. Economical Writing, by Deirdre N. McCloskey (Prospect Heights, IL: Waveland Press, 2000). b. A Guide for the Young Economist, by William Thomson (Cambridge, MA: MIT Press, 2012). Some very useful research resources: 1. Electronic databases (click on Resources A-Z on the UWM library homepage): a. EconLit lists contents and abstracts of hundreds of economics journals since 1886, as well as books, dissertations, and catalogued working papers b. Web of Science allows you to search for articles that have cited a particular article in the past; useful for identifying subsequent contributions to the literature. c. JSTOR ( full-text research papers from leading journals d. National Bureau of Economic Research working papers ( -- working papers by major scholars; often the most up-to-date research on a topic. 2. Handbook of Labor Economics, Vols. 1-3C and Handbook of Population and Family Economics, Vols. 1A-1B (library call number: HD4802.H36) published by Elsevier, these handbooks contain extensive literature reviews on many topics, written by some of the main contributors to those subfields 3. Collections of web-links to vast amounts of information and/or major data sets a. Resources for Economists on the Internet: b. Links from UWM s library: Reading list, by topic Notes: 1. This reading list is not meant to be a comprehensive bibliography, but rather a starting point for further research. It includes a mix of seminal articles, interesting applications, literature reviews, and recent work. 2. Most papers are available for download on the course page on D2L or on JSTOR. 3. For a more advanced textbook on labor economics, see Pierre Cahuc and Andre Zylberberg, Labor Economics (Cambridge, MA: MIT Press, 2014). It is available at the bookstore. 4. An excellent overview of many topics we will cover: Rosen, Sherwin Markets and Diversity. American Economic Review 92(1): (Presidential Address to the AEA.) 5. Abbreviations: AEJAE=American Economic Journal: Applied Economics, AER=American Economic Review, BellJE=Bell Journal of Economics, ECTA=Econometrica, EJ=Economic Journal, ILRR=Industrial & Labor Relations Review, JEL=Journal of Economic Literature, JEP=Journal of Economic Perspectives, JHR=Journal of Human Resources, JOLE=Journal of Labor Economics, JPE=Journal of Political Economy, LE=Labour Economics, OEP=Oxford Economic Papers, QJE=Quarterly Journal of Economics, REStat=Review of Economics and Statistics, REStud=Review of Economic Studies.

3 I. Empirical Methods for Labor Economics and Applied Microeconomics A. Brief review: Counterfactuals, Least squares, Maximum likelihood, Endogeneity and Omitted variables bias B. Difference-in-Differences Models a. Bertrand, Marianne, Esther Duflo, and Sendhil Mullainathan "How Much Should We Trust Differences-In-Differences Estimates?" QJE 119, b. Krueger, Alan B., and Jorn-Steffen Pischke The Effect of Social Security on Labor Supply: A Cohort Analysis of the Notch Generation. JOLE 10, c. Eissa, Nada, and Jeffrey B. Liebman Labor Supply Response to the Earned Income Tax Credit. QJE 111, d. DeLeire, Thomas The Wage and Employment Effects of the Americans with Disabilities Act. JHR 35, e. Almond, Douglas Is the 1918 Influenza Pandemic Over? Long Term Effects of In Utero Influenza Exposure in the Post 1940 U.S. Population. JPE f. Autor, David H., John J. Donohue III, and Steward J. Schwab The Cost of Wrongful Discharge Laws. REStat 88, g. Lovenheim, Michael F The Effect of Teachers Unions on Education Production: Evidence from Union Election Certifications in Three Midwestern States. JOLE 27, Readings, application to Divorce Law: a. Friedberg, Leora Did Unilateral Divorce Raise Divorce Rates? Evidence from Panel Data, AER 88, b. Wolfers, Justin Did Unilateral Divorce Raise Divorce Rates? A Reconciliation and New Results, AER 96, c. Peters, H. Elizabeth Marriage and Divorce: Informational Constraints and Private Contracting. AER 76, d. Lee, Jin Young, and Gary Solon The Fragility of Estimated Effects of Unilateral Divorce Laws on Divorce Rates. The BE Journal of Economic Analysis & Policy 11. (Also NBER Working Paper ) e. Kim, Dukpa, and Tatsushi Oka Divorce Law Reforms and Divorce Rates in the U.S.: An Interactive Fixed Effects Approach. Journal of Applied Econometrics 29, f. Peters, H. Elizabeth Marriage and Divorce: Reply. AER 82, g. Allen, Douglas W Marriage and Divorce: Comment. AER 82, h. Drewianka, Scott Divorce Law and Family Formation. Journal of Population Economics 21, i. Caceres-Delpiano, Julio, and Eugenio Giolito The Impact of Unilateral Divorce on Crime. JOLE 30, j. Genadek, Katie R., Wendy A. Stock, and Christiana Stoddard No-Fault Divorce Laws and the Labor Supply of Women with and without Children. JHR 42, C. Instrumental variables a. Imbens, Guido W Instrumental Variables: An Econometrician s Perspective. NBER Working Paper b. Angrist, Joshua D Lifetime Earnings and the Vietnam Era Draft Lottery: Evidence from Social Security Administrative Records. AER 80, c. Gould, Eric D., Bruce A. Weinberg, and David B. Mustard Crime Rates and Local Labor Market Opportunities in the United States: REStat 84, d. Lovenheim, Michael F The Effect of Liquid Housing Wealth on College Enrollment. JOLE 29, e. Cortes, Patricia, and Jose Tessada Low-Skilled Immigration and the Labor Supply of Highly Skilled Women. AEJAE 3, f. Stevenson, Betsey Beyond the Classroom: Using Title IX To Measure the Return To High School Sports. REStat 92, g. Chi, Miao, and Scott Drewianka How Much Is a Green Card Worth? Evidence from Mexican Men Who Marry Women Born in the U.S. LE 31, D. Regression discontinuity designs a. DiNardo, John, and David S. Lee Economic Impacts of New Unionization on Private Sector Employers: QJE 119, (Also NBER Working Paper ) b. Lee, David S., and Thomas Lemieux Regression Discontinuity Designs in Economics. JEL 48, c. Almond, Douglas, and Joseph J. Doyle Jr After Midnight: A Regression Discontinuity Design in Length of Postpartum Hospital Stays. American Economic Journal: Economic Policy 3, d. Martorell, Paco, and Isaac McFarlin Jr Help or Hindrance? The Effects of College Remediation on Academic and Labor Market Outcomes. REStat 93, E. Selection models, with applications to immigration, women s labor supply, and education a. Heckman, James Shadow Prices, Market Wages, and Labor Supply. ECTA 42, b. Borjas, George J Self-Section and the Earnings of Immigrants. AER 77, c. Willis, Robert J. and Sherwin Rosen Education and Self-Selection. JPE 87(5, pt. 2), S7-36.

4 d. LaLonde, Robert J Evaluating the Econometric Evaluations of Training Programs with Experimental Data. AER 76, e. Heckman, James J Sample Selection Bias as Specification Error. ECTA 47, f. Cunha, Flavio, James Heckman, and Salvador Navarro Separating Uncertainty from Heterogeneity in Lifetime Earnings. OEP 57, g. Roy, Andrew D Some Thoughts on the Distribution of Earnings. OEP 3, h. Heckman, James J Micro Data, Heterogeneity, and the Evaluation of Public Policy: Nobel Lecture. JPE 109, i. Berndt, Ernst Whether and How Much Women Work for Pay: Applications of Limited Dependent Variable Procedures. In The Practice of Econometrics (Reading, MA: Addison-Wesley), Ch. 11. j. Heckman, James J., and V. Joseph Hotz Choosing Among Alternate Nonexperimental Methods for Estimating the Impact of Social Programs: The Case of Manpower Training. Journal of the American Statistical Association 84, k. Amemiya, Takeshi Advanced Econometrics (Cambridge, MA: Harvard U. Press), Chs l. Heim, Bradley T The Incredible Shrinking Elasticities: Married Female Labor Supply, JHR 42, F. Method of moments estimation, with application to income instability a. Haider, Steven J Earnings Instability and Earnings Inequality of Males in the United States: JOLE 19, b. Gottschalk, Peter, and Robert Moffitt The Growth of Earnings Instability in the U.S. Labor Market. Brookings Papers on Economic Activity (No. 2), c. Krueger, Dirk, and Fabrizio Perri Does Income Inequality Lead to Consumption Inequality? Evidence and Theory. REStud 73, d. Carroll, Christopher D., and Andrew A. Samwick The Nature of Precautionary Wealth. Journal of Monetary Economics 40, e. Meghir, Costas, and Luigi Pistaferri Income Variance Dynamics and Heterogeneity. QJE 72, f. Saks, Raven E. and Stephen H. Shore Risk and Career Choice. Advances in Economic Analysis & Policy 5, Art. 7. g. Gottschalk, Peter, and Robert Moffitt The Rising Instability of U.S. Earnings. JEP 23, h. Blundell, Richard, and Ian Preston Consumption Inequality and Income Uncertainty. QJE 113, i. Hyslop, Dean R Rising U.S. Earnings Inequality and Family Labor Supply: The Covariance Structure of Intrafamily Earnings. AER 91, j. Browning, Martin, and Mette Ejrnaes Heterogeneity in the Dynamics of Labor Earnings. Annual Review of Economics 5, II. The Structure of Work within Firms A. The Division of Labor and Specialization a. Smith, Adam The Wealth of Nations. Book I, Chapters 1-3. b. Becker, Gary S., and Kevin M. Murphy The Division of Labor, Coordination Costs, and Knowledge. QJE 107, c. Grossman, Gene M., and Carl Shapiro A Theory of Factor Mobility. JPE 90, d. Murphy, Kevin M Specialization and Human Capital. Ph.D. Dissertation, U. of Chicago. B. Hierarchies and Teams a. Kremer, Michael The O-Ring Theory of Economic Development QJE 108, b. Rosen, Sherwin Authority, Control, and the Distribution of Earnings. BellJE 13, c. Holmstrom, Bengt Moral Hazard in Teams. BellJE 13, d. Sah, Raaj K., and Joseph E. Stiglitz The Architecture of Economic Systems: Hierarchies and Polyarchies. AER 76, e. Garicano, Luis Hierarchies and the Organization of Knowledge in Production. JPE 108, III. Careers: Unemployment, Job Search, Experience, and Turnover A. Job Search and Turnover a. Sargent, Thomas J Search. Ch. 2 of Dynamic Macroeconomic Theory (Cambridge, MA: Harvard U. Press), b. Jovanovic, Boyan Job Matching and the Theory of Turnover. JPE 87, c. Jovanovic, Boyan Firm-specific Capital and Turnover.'' JPE 87, d. Topel, Robert H., and Michael P. Ward Job Mobility and the Careers of Young Men. QJE 107, e. Diamond, Peter A Mobility Costs, Frictional Unemployment, and Efficiency. JPE 89,

5 f. Mortensen, Dale T Specific Capital and Labor Turnover.'' BellJE 9, g. Shimer, Robert The Cyclical Behavior of Equilibrium Unemployment and Vacancies: Evidence and Theory. AER 95, h. Hall, Robert E Wage Determination and Employment Fluctuations. NBER Working Papers, number i. Schmieder, Johannes F., and Till von Wachter Does Wage Persistence Matter for Employment Fluctuations? Evidence from Displaced Workers. AEJAE 2, j. Mortensen, Dale T Property Rights and Efficiency in Mating, Racing, and Related Games.'' AER 72, k. Mortensen, Dale T Matching: Finding a Partner for Life or Otherwise, American Journal of Sociology, 44, S l. Flinn, Christopher J Wages and Job Mobility of Young Workers. JPE 94, S m. Autor, David H., William R. Kerr, and Adriana D. Kugler Does Employment Protection Reduce Productivity? Evidence from US States. EJ 117, F189-F217. n. Diamond, Peter Unemployment, Vacancies, and Wages. AER 101, o. Mortensen, Dale T Markets with Search Frictions and the DMP Model. AER 101, p. Pissarides, Christopher Equilibrium in the Labor Market with Search Frictions. AER 101, q. Kroft, Kory, and Devin G. Pope Does Online Search Crowd Out Traditional Search and Improve Matching Efficiency? Evidence from Craigslist. JOLE 32, B. Job-Specific Human Capital and Other Match-Specific Rents a. Topel, Robert Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority. JPE 99, b. Lazear, Edward P Firm-Specific Human Capital: A Skill-Weights Approach. JPE 117, c. Oi, Walter Y Labor as a Quasi-Fixed Factor. JPE 70, d. Becker, Gary S Investment in Human Capital: A Theoretical Analysis. JPE 70(5, pt. 2), e. Heckman, James, and Jose Scheinkman The Importance of Bundling in a Gorman-Lancaster Model of Earnings. REStud 54, f. Hall, Robert E The Importance of Lifetime Jobs in the U.S. Economy. AER 72, g. Abraham, Katherine G. and Henry S. Farber Job Duration, Seniority, and Earnings. AER 77, h. Altonji, Joseph G., and Nicolas Williams Do Wages Rise with Job Seniority? A Reassessment. ILRR 58, i. Stevens, Margaret Earnings Functions, Specific Human Capital, and Job Matching: Tenure Bias is Negative. JOLE 21, j. Buchinsky, Moshe, Denis Fougere, Francis Kramarz, and Rusty Tchernis Interfirm Mobility, Wages, and the Return to Seniority and Experience in the U.S. REStud 77, k. Becker, Gary S Investment in Human Capital: Effects on Earnings. Chapter II of Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education. Second Edition (Chicago: The University of Chicago Press), l. Lazear, Edward P Why is there Mandatory Retirement? JPE 87, m. Lazear, Edward P., and Sherwin Rosen Rank-Order Tournaments as Optimum Labor Contracts. JPE 89, n. Beaudry, Paul, and John DiNardo The Effect of Implicit Contracts on the Movement of Wages over the Business Cycle: Evidence from Micro Data. JPE 99, o. Jacobson, Louis S., Robert J. LaLonde, and Daniel G. Sullivan Earnings Losses of Displaced Workers. AER 83, p. Couch, Kenneth A., and Dana W. Placzek Earnings Losses of Displaced Workers Revisited. AER 100, IV. Economics and Demography A. Migration and Immigration Readings, Migration: a. Sjaastad, Larry A The Costs and Returns of Human Migration. JPE 70 (5, supp.), b. Mincer, Jacob Family Migration Decisions. JPE 86, c. Boustan, Leah Platt, Price V. Fishback, and Shawn Kantor The Effect of Internal Migration on Local Labor Markets: American Cities during the Great Depression. JOLE 28, d. Saks, Raven, and Abigail Wozniak Labor Reallocation over the Business Cycle: New Evidence from Internal Migration. JOLE 29, e. Molloy, Raven, Christopher Smith, and Abigail Wozniak Internal Migration in the United States. JEP 25, f. Molloy, Raven, Christopher L. Smith, and Abigail Wozniak Declining Migration within the U.S.: The Role of the Labor Market. NBER Working Paper Readings, Immigration: a. Borjas, George J Self-Section and the Earnings of Immigrants. AER 77, b. Card, David The Impact of the Mariel Boatlift on the Miami Labor Market. ILRR, c. Chiswick, Barry R The Effect of Americanization on the Earnings of Foreign-Born Men. JPE 86, d. Borjas, George J Assimilation, Changes in Cohort Quality, and the Earnings of Immigrants. JOLE 3: e. Card, David Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration. JOLE 19,

6 f. Borjas, George J Native Internal Migration and the Labor Market Impact of Immigration. JHR 41, g. Cortes, Kalena E Are Refugees Different from Economic Migrants? Some Empirical Evidence on the Heterogeneity of Immigrant Groups in the United States. REStat 86, h. Card, David Is the New Immigration Really So Bad? EJ 115, F300 F323. i. LaLonde, Robert J., and Robert H. Topel Immigrants in the American Labor Market: Quality, Assimilation, and Distributional Effects. AER 81, j. Smith, Christopher L The Impact of Low-Skilled Immigration on the Youth Labor Market. JOLE 30, k. Chi, Miao, and Scott Drewianka How Much Is a Green Card Worth? Evidence from Mexican Men Who Marry Women Born in the U.S. LE 31, B. Family Structure: Marriage and Divorce a. Becker, Gary S A Treatise on the Family, Extended Ed. (Cambridge: Harvard U. Press). b. Becker, Gary S A Theory of Marriage, In Economics of the Family: Marriage, Children, and Human Capital, edited by Theodore W. Schultz (Chicago: U. of Chicago Press). c. Becker, Gary S., Elisabeth M. Landes, and Robert T. Michael An Economic Analysis of Marital Instability. JPE 85, d. Weiss, Yoram The Formation and Dissolution of Families: Why Marry? Who Marries Whom? And What Happens upon Divorce. Ch. 3 of M.R. Rosenzweig and O. Stark, eds., Handbook of Population and Family Economics (New York: Elsevier). e. Lillard, Lee A., Michael J. Brien, and Linda J. Waite Premarital Cohabitation and Subsequent Marital Dissolution: A Matter of Self-Selection? Demography 32, f. Weiss, Yoram, and Robert J. Willis Match Quality, New Information, and Marital Dissolution. JOLE 15, S293-S329. g. Drewianka, Scott D Theories of Family Structure: Implications from a Generalized Model of Commitment. Working Paper, University of Wisconsin-Milwaukee. h. Loughran, David S "The Effect of Male Wage Inequality on Female Age at First Marriage." REStat 84, i. Gould, Eric D., and M. Daniele Paserman Waiting for Mr. Right: Rising Inequality and Declining Marriage Rates. Journal of Urban Economics 53, j. Drewianka, Scott Estimating Social Effects in Matching Markets: Externalities in Spousal Search, REStat 85, k. Charles, Kerwin Kofi, and Melvin Stephens, Jr Job Displacement, Disability, and Divorce. JOLE 22, l. Charles, Kerwin Kofi, and Ming Ching Luoh Male Incarceration, the Marriage Market, and Female Outcomes. REStat 92, m. Costa, Dora L., and Matthew E. Kahn Power Couples: Changes in the Locational Choice of the College Educated, QJE 115, n. Compton, Janice, and Robert A. Pollak Why Are Power Couples Increasingly Concentrated in Large Metropolitan Areas? JOLE 2, o. Goldin, Claudia, and Lawrence F. Katz The Power of the Pill: Oral Contraceptives and Women s Career and Marriage Decisions. JPE 110,