Many surveys of key topics in labor economics are available in the Handbook of Labor Economics, published by Elsevier Science.

Semester II, AY2013/2014 National University of Singapore Graduate Labor Economics (EC 5361) Instructor: Jessica Pan (jesspan@nus.edu.sg) Course description: This is a graduate course in labor economics and covers core topics in the field of labor economics and empirical methods for applied microeconomic analysis. There is no compulsory textbook for the course. Readings designated by an asterisk (*) will be emphasized in the lectures. Readings designated by a (P) can be selected for the in-class presentation. Readings with no asterisk may be discussed in the lectures briefly, but are primarily offered as a guide to the literature. Lecture Times Wednesday, 2pm to 5pm, AS2-0413 Final Exam: 29 April 2014 (Tuesday), 1pm Background Reading Many surveys of key topics in labor economics are available in the Handbook of Labor Economics, published by Elsevier Science. For an introductory background reference, see the undergraduate labor economics textbook by George Borjas, Labor Economics, Fifth Edition, McGraw Hill. An existing graduate level textbook is Pierre Cahuc and Andre Zylberberg, Labor Economics, MIT Press, 2004. For a useful guide for empirical work, see the recent book by Angrist and Pischke, Mostly Harmless Econometrics, Princeton University Press. Grading Course grades will be based on a number of assignments, each of which is intended to prepare students for independent research. 2 referee reports (30%), which will be based on works-in-progress or job market papers presented at NUS. These papers will be selected and announced during the course of the semester and will be due two weeks after the announcement. Students can choose to do reports on any paper. A good report will summarize the main approach and contribution of the paper, and then provide a critical assessment of the work. Referee reports should be around 2 pages, single-spaced. Paper presentation (20%) short in-class presentation of approximately 15 minutes on an assigned paper relating to the topic of the week (1-2 students per group). 2-3 problem sets (20%) 1

Final exam (30%) Tentative Lecture Schedule: Week 1-Week 6: Wage Determination, Week 8- Week 13: Wage Structure Week 1 15 Jan, Wed Lecture 1 Intro, Stylized Facts, Program Evaluation Program, Basic Human Capital Model Week 2 22 Jan, Wed Lecture 2 Human Capital Schooling Models, Estimating Returns to Education Week 3 29 Jan, Wed Lecture 3 Signaling and Learning Models of Education Week 4 5 Feb, Wed Lecture 4 Self-selection and Earnings: Roy Model Week 5 12 Feb, Wed Lecture 5 Compensating Wage Differentials Week 6 19 Feb, Wed Lecture 6 Efficiency Wages (Recess Week) 26 Feb, Wed No Class Week 7 (Midterm 5 March, Wed No Class Week) Week 8 Week 9 12 March, Wed 19 March, Wed Lecture 7 Lecture 8 Wage Structure and Inequality. Theory of skill Premia and Technical change Week 10 26 March, Wed Lecture 9 Immigration and the Wage Structure Week 11 2 April, Wed Lecture 10 Labor Market Institutions and Wage Structure Week 12 9 April, Wed Lecture 11 Discrimination Theory and Week 13 16 April, Wed Lecture 12 Evidence Readings for First Part (Tentative) I. Human Capital Human Capital Investment: Theory and Basic Facts * R. Willis (1986) Wage Determinants: A Survey and Reinterpretation of Human Capital Earnings Functions, Handbook of Labor Economics, Vol. 1, Elsevier, 1986, pp. 525-602. * J. Mincer (1974) Schooling, Experience, and Earnings. New York: Columbia University Press for the National Bureau of Economic Research, pp. 7-22. * T. Lemieux. (2006) The Mincer Equation Thirty Years After Schooling, Experience and Earnings, G. Becker. (1993) Human Capital, 3 rd ed. Chicago: University of Chicago Press, pp. 1-66. 2

S. Rosen. (1977) Human Capital: A Survey of Empirical Research, Research in Labor Economics, Vol. 1, pp. 3-40. K. Murphy and F. Welch. (1990) Empirical Age-Earnings Profiles, Journal of Labor Economics, 8 (April), 202-229. S. Jayachandran and A. Lleras-Muney. (2009) Life Expectancy and Human Capital Investment: Evidence from Maternal Mortality Declines, Quarterly Journal of Economics 124 (Feb), 349-98. Estimating the Rate of Return to Schooling on Earnings and Other Outcomes * D. Card. (1999) The Causal Effect of Education on Earnings, in the Handbook of Labor Economics, Vol. 3A, O. Ashenfelter and D. Card, eds. Amsterdam: Elsevier Science * J. Angrist and A. Krueger. (1991) Does Compulsory School Attendance Affect Schooling and Earnings? Quarterly Journal of Economics, 106 (November), 979-1015. * O. Ashenfelter and C. Rouse. (1998) Income, Schooling and Ability: Evidence fom a New Sample of Identical Twins, Quarterly Journal of Economics 113 (Feb), 253-84. * P. Oreopoulos. (2006) Estimating Average and Local Treatment Effects of Education When Compulsory Schooling Laws Really Matter, AER 96 (March), 152-75. (P) A. Lleray-Muney (2005) The Relationship between Education and Adult Mortality in the United States, Review of Economic Studies 72 (January). (P) J. Currie and E. Moretti. (2003) Mother s Education and the Intergenerational Transmission of Human Capital: Evidence from College Openings, QJE 118 (November), 1495-1532. (P) J. Bound and G. Solon. (1999) Double Trouble: On the Value of Twins-Based Estimation of the Return to Schooling, Economics of Education Review. 18.2 (April), 169-82 D. Card. (2001) Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems, Econometrica 69 (September), 1129-60. P. Carneiro and J. Heckman. (2002) The Evidence on Credit Constraints in Post-Secondary Schooling," Economic Journal, 112 (October), 989-1018. F. Lange and R. Topel. (2006) "The Social Value of Education and Human Capital," http://www.econ.yale.edu/~fl88/handbook_chapter.pdf. Signaling, Screening, and Learning Models of Education and Earnings * A.M. Spence. (1973) "Job Market Signaling," Quarterly Journal of Economics, 87 (Aug), 355-74. 3

* J. Tyler, R. Murnane, and J. Willett. (2000) AEstimating the Impact of the GED on the Earnings of Young Dropouts Using a Series of Natural Experiments,@ QJE, 115 (May), 431-69. * K. Bedard. (2001) "Human Capital Versus Signaling Models: University Access and High School Dropouts," Journal of Political Economy, 109 (August), 749-775. (P) J. Altonji and C. Pierret. (2001), "Employer Learning and Statistical Discrimination," Quarterly Journal of Economics 116 (February), 313-50. (P) D. Clark and P. Martorell. (2010), The Signaling Value of a High School Diploma, Working Paper (P) D. Autor and D. Scarborough. (2008) Does Job Testing Harm Minority Workers? Evidence from Retail Establishments, QJE 123 (February), 219-77. H.S. Farber and R. Gibbons. (1996) "Learning and Wage Dynamics," Quarterly Journal of Economics, 111.4 (November), 1007-47. F. Lange. (2007) "The Speed of Employer Learning," Journal of Labor Economics, 25 (Jan.). K. Lang and D. Kropp. (1986) Human Capital vs. Sorting: The Effects of Compulsory Schooling Laws, Quarterly Journal of Economics, 101 (August), 609-24. Program Evaluation I: The Program Evaluation Problem and Estimating the Returns to Training * J.D. Angrist, G.W. Imbens, and D.B. Rubin. (1996) Identification of Causal Effects Using Instrumental Variables, Journal of the American Statistical Association, 91.434 (June), 444-55. * G. Imbens and T. Lemieux (2008) Regression Discontinuity Designs: A Guide to Practice," Journal of Econometrics 142 (February), 615-35. * R. LaLonde (1986) "Evaluating the Econometric Evaluations of Training Programs with Experimental Data," American Economic Review 76 (September), 604-620. * R. Dehejia and S. Wahba. (1999) Causal Effects in Non-Experimental Studies: Re- Evaluating the Evaluation of Training Programs, JASA, 94.448 (December), 1053-1062. G. Imbens and J. Wooldridge (2009) Recent Developments in the Econometrics of Program Evaluation, Journal of Economic Literature 47 (March), 5-86. J. Heckman and V.J. Hotz. (1989) "Choosing Among Alternative Nonexperimental Methods for Estimating the Impact of Social Programs: The Case of Manpower Training," Journal of the American Statistical Association, 84.408 (December), 862-74. Program Evaluation II: Evaluating the Impacts of School Policies on Student Outcomes 4

(P) J.D. Angrist and V. Lavy. (1999) Using Maimonides' Rule to Estimate the Effect of Class Size on Scholastic Achievement, Quarterly Journal of Economics, 114 (May), 533-575. (P) J. Ludwig and D. Miller (2007) "Does Head Start Improve Children s Life Chances? Evidence from a Regression Discontinuity Design," Quarterly Journal of Economics 122 (Feb), 159-208. (P) M. Urquiola and E. Verhoogen. (2009) Class-Size Caps, Sorting, and the Regression- Discontinuity Design, American Economic Review 99 (March), 179-215. (P) S. Black. (1999). Do Better Schools Matter? Parental Evaluation of Elementary Education, Quarterly Journal of Economics 114 (May), 577-600. J. Altonji, T. Elder, and C. Taber. (2005) "Selection on Observed and Unobserved Variables: Assessing the Effectiveness of Catholic Schools," Journal of Political Economy 113 (February). P. Todd and K. Wolpin (2003) "On the Specification and Estimation of the Production Function for Cognitive Achievement," Economic Journal (February), F3-F33. C.M. Hoxby. (2000) The Effect of Class Size on Student Achievement: New Evidence from Natural Population Variation, Quarterly Journal of Economics 115 (November). II. Self-Selection and Earnings The Roy Model, Self-Selection, and Immigration: Theory and Evidence * A. Roy. (1951) "Some Thoughts on the Distribution of Earnings" Oxford Economic Papers, 235-46. * G. Borjas. (1987) "Self-Selection and the Earnings of Immigrants" AER, 77 (September), 531-53. (P) D. Chiquiar and G. Hanson. (2005) "International Migration, Self-Selection and the Distribution of Wages," Journal of Political Economy 113 (April), 239-81. (P) J. Grogger and G. Hanson. (2011) Income Maximization and the Selection and Sorting of Immigrants, Journal of Development Economics 95(1): 42-57. (P) Bacolod, Marigee P. 2007 Do Alternative Opportunities Matter? The Role of Female Labor Markets in the Decline of Teacher Quality. Review of Economics and Statistics. 89(4): 737-751. R. Friedberg. (2000) You Can t Take it With You? Immigrant Assimilation and the Portability of Human Capital, Journal of Labor Economics, 18 (April), 221-251. H. Bleakley and A. Chin. (2004) Language Skills and Earnings: Evidence from Childhood Immigrants, RESTAT 86 (May), 481-96. 5

R. Willis and S. Rosen. (1979) "Education and Self-Selection," JPE, 87, S7-S36. III. Compensating Wage Differences * S. Rosen. (1986) "The Theory of Equalizing Differences" Handbook of Labor Economics, Vol.1, Amsterdam: Elsevier Science, 641-92. * S. Kahn and K. Lang. (1988) "Efficient Estimation of Structural Hedonic Systems" International Economic Review, Vol. 29.1 (February), 157-66. * C. Brown. (1980) "Equalizing Differences in the Labor Market," Quarterly Journal of Economics, 94 (February), 113-34. * J. Gruber. (1994) "The Incidence of Mandated Maternity Benefits," American Economic Review, 84 (June), 622-41. * P. Fishback and S. Kantor. (1995) "Did Workers Pay for the Passage of Workers' Compensation Laws?" Quarterly Journal of Economics, 110 (August), 713-42. * S. Stern. (2004) "Do Scientists Pay to Do Science?" Management Science 50 (June), 835-53. (P) Olson, C. "Do Workers Accept Lower Wages in Exchange for Health Benefits?" Journal of Labor Economics 20(2) (April 2002): S91-S114. (P) E. del Bono and A. Weber. (2008) Do Wages Compensate for Anticipated Working Hour Restrictions? Evidence from Seasonal Employment in Austria, JOLE 26 (Jan), 181-221. (P) Gertler, P., M. Shah and S. Bertozzi. Risky Business: The Market for Unprotected Commercial Sex Journal of Political Economy, 2005, vol. 113, no. 3 S. Rosen. (1974) "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition" Journal of Political Economy, Vol. 82.1 (January-February), 34-55. I. Ekeland, J.J. Heckman, and L.P. Nesheim. (2004) Identification and Estimation of Hedonic Models, Journal of Political Economy 112 (Feb S1), S60-S109. IV. Efficiency Wages and Segmented Labor Markets * Shapiro, Carl, and Joseph E. Stiglitz. (1984) Equilibrium Unemployment as a Worker Discipline Device. American Economic Review 74(3), 433-444. Kahneman, Daniel, Jack L. Knetsch and Richard Thaler, Fairness as a Constraint on Profit Seeking: Entitlements in the Market. American Economic Review, 76(4), 1986, 728 41. (P) Cappelli, Peter and Keith Chauvin, An Interplant Test of the Efficiency Wage Hypothesis. Quarterly Journal of Economics, 106(3), August 1991, 769 787. 6

(P) Holzer, Harry J, Lawrence F. Katz, and Alan B. Krueger, Job Queues and Wages. Quarterly Journal of Economics, 106(3), 1991, 739 68. (P) R. Gibbons and L. Katz. (1992) "Does Unmeasured Ability Explain Inter-Industry Wage Differentials?" Review of Economic Studies, 59 (July), 515-35. V. Wage Structure and Inequality Laying out the Facts: *Autor, David H., Lawrence F. Katz and Melissa Schettini Kearney. 2008. Trends in U.S. Wage Inequality: Re-Assessing the Revisionists. Review of Economics and Statistics, 90(2), 300-323. *Goos, Maarten and Alan Manning. 2007. Lousy and Lovely Jobs: The Rising Polarization of Work in Britain. Review of Economics and Statistics, 89(1), 118-133. Goldin, Claudia and Lawrence Katz. 2008. The Race between Education and Technology. Cambridge: Harvard University Press. (P) Piketty, Thomas and Emmanuel Saez. 2003. Income Inequality in the United States, 1913-1998. Quarterly Journal of Economics, 118(1), 1-40. (P) Wokciech Kopczuk and Lena Edlund. 2009. Women, Wealth and Mobility. American Economic Review. 99(1), 146-178. (P) Autor, David and David Dorn. 2013. The Growth of Low Skill Service Jobs and the Polarization of the U.S. Labor Market. American Economic Review, 103(5), 1553-1597. The Theory of Skill Premia with an Application to Wage Structure Changes *Acemoglu, Daron. 2002. Technical Change, Inequality and the Labor Market. Journal of Economic Literature. 40, 7-72. *Katz, Lawrence, F. and Kevin M. Murphy. 1992. Changes in Relative Wages, 1963-1987: Supply and Demand Factors. Quarterly Journal of Economics, 107, 35-78. *Leuven, Edwin, Hessel Oosterbeek and Hans van Ophem. 2004. Explaining International Differences in Male Skill Wage Differentials by Differences in Demand and Supply of Skill. Economic Journal, 114, 466-486. (P) Acemoglu, Daron, David Autor and David Lyle. 2004. Women, War, and Wages: The Effect of Female Labor Supply on the Wage Structure at Midcentury. Journal of Political Economy, 112(3), 497-551. (P) Carneiro, Pedro and Sokbae Lee. 2011. Trends in Quality-Adjusted Skill Premia in the United States, 1960-2000. American Economic Review, 101(6): 2309-49. Technical Change, Organizational Change and Skill Demands 7

*Autor, David H., Frank Levy and Richard J. Murnane. 2003. The Skill Content of Recent Technological Change: An Empirical Exploration. Quarterly Journal of Economics, 116(4). *Acemoglu, Daron. Why do New Technologies Complement Skills: Directed Technical Change and Wage Inequality. Quarterly Journal of Economics, 113(4), 1055-1089. *Krussel, Per, Lee Ohanian, Victor Rios-Rull and Giovanni Violante. 2000. Capital-Skills Complementarity and Inequality. Econometrica, 6(5), 1029-1053. (P) Bartel, Ann P., Casey Ichniowski, and Kathryn L. Shaw. 2007. How Does Information Technology Affect Productivity? Plant-Level Comparisons of Product Innovation, Process Improvement and Worker Skills. Quarterly Journal of Economics, 122(4), November, 1721-1758. (P) Machin, Stephen, John Van Reenen. Technology and Changes in Skill Structure: Evidence from Seven OECD Countries. Quarterly Journal of Economics, 113(4), 1998, 1215-44. VI. Immigration *Card, David. 2009. Immigration and Inequality. American Economic Review Papers and Proceedings, 2009(2). *Borjas, George. 2003. The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market. Quarterly Journal of Economics, 118(4), 1335-1374. *Card, David. 1990. Impact of the Mariel Boatlift on the Miami Labor Market. Industrial and Labor Relations Review. 43: 245-257. (P) Cortes, Patricia. 2008. The Effect of Low-Skilled Immigration on U.S. Prices: Evidence from CPI Data. Journal of Political Economy. 116(3), 381-422. (P) Lewis, Ethan G. 2011. Immigration, Skill Mix, and Capital-Skill Complementarity. Quarterly Journal of Economics. 126(2): 1029-1069. (P) Peri, Giovanni and Chad Sparber. Task Specialization, Immigration, and Wages. American Economic Journal: Applied Economics. 1(3): 135-169. (P) Cortes, Patricia and Jose Tessada. 2011. Low-Skilled Immigration and the Labor Supply of Highly Skilled Women. American Economic Journal: Applied Economics. 3(3): 88-123. Cortes, Patricia and Jessica Pan. 2013. Outsourcing Household Production: The Demand for Foreign Domestic Helpers and Native Labor Supply in Hong Kong. Journal of Labor Economics. 31(2): 327-371. VII. Labor Market Institutions and Wage Structure 8

*Lee, David. 1999. Wage Inequality in the U.S. during the 1980 s: Rising Dispersion of Falling Minimum Wage. Quarterly Journal of Economics. 114(4): 941-1024. *DiNardo, John, Nicole Fortin and Thomas Lemieux. Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach. Econometrica. 64(5)-1001-1044. *Card, D. and A. Krueger. 1994. Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania. American Economic Review. 84: 772-793. (P) Kahn, Lawrence. 2000. Wage Inequality, Collective Bargaining, and Relative Employment from 1985 to 1994: Evidence from 15 OECD Countries. Review of Economics and Statistics. 82(4): 564-579. (P) Aaronson, Daniel, Eric French and James MacDonald. 2008. The Minimum Wage, Restaurant Prices, and Labor Market Structure. Journal of Human Resources. 43(3): 688-720. VIII. Discrimination Theory and Evidence Taste-based Discriminaton Altonji, Joseph and Rebecca Blank, Race and Gender in the Labor Market, in Ashenfelter, O. and D. Card, eds., Handbook of Labor Economics, Vol. 3C. Amsterdam: Elsevier, 1999. (on reserve) Becker, Gary, The Economics of Discrimination 2nd ed.. Chicago: University of Chicago Press, 1971. (P) Bertrand, Marianne and Sendhil Mullainathan. 2004. Are Emily and Greg More Employable than Latisha and Jamal? A Field Experiment on Labor Market Discrimination. American Economic Review 94, (4), September, 991-1013. (P) Charles, Kerwin K. and Jonathan Guryan. 2008. Prejudice and Wages: An Empirical Assessment of Becker s The Economics of Discrimination. Journal of Political Economy, 116(5), December, 773-809. Statistical Discrimination *Aigner and Cain, Statistical Theories of Discrimination in Labor Markets, Industrial and Labor Relations Review, 30(2), 1977, 175 187. *Autor, David and David Scarborough. 2008. Does Job Testing Harm Minority Workers? Evidence from Retail Establishments. Quarterly Journal of Economics, 123 (February). *Coate, Stephen and Glenn Loury (1993), "Will Affirmative Action Eliminate Negative Stereotypes?" American Economic Review, 83 (5), 1220-1240. (P) Mobius, Markus and Tanya Rosenblatt. 2006. Why Beauty Matters. American Economic Review, 96(1), March, 222-235. 9