EC 4080 Labour economics (economics of human resources) Academic Year 2004-2005 Lecturers: Chris Minns and Marian Rizov Office: 3012, TBA Telephone: x2391, x3207 email: minnsc@tcd.ie, rizovm@tcd.ie web: www.tcd.ie/economics/staff/minnsc/ec4080.htm Office hours: Minns, Monday 15:00-16:00 and Wednesday 11:00-12:00, Rizov TBA Summary This course offers a survey of the field of labour economics. Dr Chris Minns and Dr Marian Rizov are jointly teaching the course in the coming academic year. Our objectives in the course are as follows: 1. To present the basic micro-foundations of the labour market. We will use diagrams, algebra, and some elementary calculus to see how economic theory yields interesting and testable predictions as to how workers and firms should behave in response to changing conditions in the labour market. 2. To examine the economic theories underlying other important aspects of worker well being: compensating differentials, human capital, immigration, and discrimination. 3. We will illustrate how practitioners of empirical research evaluate the predictions of economic theory, and the impact of particular policies and institutions. In other words, how does the real world stack up against the blackboard predictions of economic theory? In looking at this body of research, we will draw particular attention to the obstacles facing empirical researchers, and the strategies adopted in face of these obstacles. We will not perform econometric exercises in this course, but you will learn how to read and critique empirical research. 4. We also want to show you how the theory and measurement techniques used by labour economists have value in answering major research questions in other areas of economic inquiry. Dr Rizov has published extensively on the economics of the household in developing countries and economies in transition. Dr Minns is an economic historian with primary interests in immigration, ethnicity, and education in 19 th century labour markets. The course is structured to best take advantage of the expertise of the two lecturers. Dr Minns will lead off in Section A, which consists of 5 weeks of lectures on the supply and demand foundations of labour markets. He will hand off to Marian for section B, in which Dr Rizov will discuss more advanced topics in labour supply. Dr Minns returns for section C, with human capital, discrimination, and the analysis of immigration in labour markets. Dr Rizov will teach the topics in section D over the final five weeks.
Evaluation 25 percent term work (further details TBA) 75 percent from final examination Classes Classes will be held fortnightly beginning in week 3. Practice questions and other material for classes will be distributed the week before the class in which they are to be discussed. Reading List The course textbook is George Borjas's Labor Economics (3 nd ed.), McGraw-Hill, 2003. This book has been ordered into the local academic bookstores, and multiple copies are available on reserve. An alternative text is Ronald Ehrenberg and Robert Smith, Modern Labor Economics, Addison Wesley. There are copies of the 6 th edition (1997) available in the library on reserve. Both texts offer a fine overview of the field of labour economics. For some topics, Bardhan and Udry s Development Microeconomics, Oxford University Press (1999), will be used. In addition to the course texts, you will be required to read several papers and book chapters. Some of these are readable surveys of the state of research surrounding a particular issue in labour economics. Others are example of interesting (and often influential) empirical work in labour economics. Your focus in reading these papers should not be on the technical details, but rather on the bigger picture the author (or authors) is putting forth: why is the topic of the paper an interesting question? How does the author set about answering the questions he or she poses? What is novel about the approach that allows an interesting question to be answered for the first time, or how does the author get a better picture than did previous researchers? What do the findings tell us about theory and/or policy? How do the findings differ (or resemble) earlier studies with different data sources or techniques? We will discuss reading strategies, and how to interpret statistical tables you will see in many of these readings. In addition to the listed readings, you are also responsible for any additional material covered in classes or lectures. Papers market JSTOR can be downloaded from the JSTOR internet journal archive. Point your browser to www.jstor.org, and from there you can search or browse facilities to find the papers. Readings marked (R) are available on counter reserve. Books marked (Lecky) are available in the Lecky library. S Adams and D Neumark, Living wage effects: new and improved evidence. NBER working paper 9702, 2003. (Available at www.nber.org, follow the links to the working paper series.) J Angrist and A Krueger, Does compulsory school attendance affect schooling and earnings? Quarterly Journal of Economics, 1991, pp. 979-1014. (JSTOR) Bardhan and Udry, Development Microeconomics, OUP (1999). (R)
D Benjamin, Household composition, labour markets, and labour demand: Testing for separation in agricultural household models. Econometrica, 1992, pp. 287-322. (JSTOR) A Blinder and D Choi, A shred of evidence on theories of wage stickiness. Quarterly journal of economics, 1990, pp. 1003-1015. (JSTOR) G Borjas, Self-selection and the earnings of immigrants. American Economic Review, 1987, pp. 531-553. (JSTOR) G Borjas, The economics of immigration. Journal of Economic Literature, 1994, pp. 1667-1717. (JSTOR) G Borjas, Heaven's Door. (Princeton: Princeton U Press, 1999) (R) G Borjas, R Freeman, L Katz Searching for the impact of immigration on the labour market. American economic review, 1996, pp. 246-251. (JSTOR) C Camerer, L Babcock, G Loewenstein, and R Thaler, Labor supply of New York City cabdrivers: one day at a time. Quarterly journal of economics, 1997, pp. 407-441. (JSTOR) B Chiswick, The effect of Americanization on the earnings of foreign-born men. Journal of political economy, 1978, pp. 897-921. (JSTOR) D Card, The impact of the Mariel Boatlift on the Miami labour market. Industrial and labour relations review, 1990, pp. 245-257. (R) D Card and A Krueger, Minimum wages and employment: a case study of the fast-food industry in New Jersey and Pennsylvania. American Economic Review, 1994, pp. 772-793. D Card and A Krueger, Myth and measurement. Princeton: Princeton U Press, 1997 (Lecky) W Carrington, The Alaskan labor market during the pipeline era. Journal of political economy, 1996, pp. 186-218. (JSTOR) L Carmichael, Incentives in academics: why is there tenure? Journal of political economy, 1988, pp. 453-472. (JSTOR) P Dolton and D O'Neill, Unemployment duration and the Restart effect: some experiemental evidence. Economic Journal, 1996, pp. 387-400. (JSTOR) R Ehrenberg (ed.), Review symposium on Myth and measurement: the new economics of the minimum wage. Industrial and labour relations review, 1995, pp. 827-828. (RES) K Foley (Social Research and Demonstration Corporation), New evidence from the Self- Sufficiency Project on the potential earnings supplements to increase labour force attachment among welfare recipients. SRDC working paper 04-02, 2004. (Available on-line at http://www.canadiansocialresearch.net/ssp.htm) R Friedberg and J Hunt, The impact of immigrants on host country wages, employment and growth. Journal of Economic Perspectives, 1995, pp. 23-44. (JSTOR)
C Goldin and C Rouse, Orchestrating impartiality: the impact of blind auditions on female musicians. American Economic Review, 2000, pp. 715-741. (R) R Gronau, Leisure, home production, and work the theory of the allocation of time revisited. Journal of political economy, 1977, pp. 1099-1124. (JSTOR) J Harris and M Todaro, Migration, unemployment, and development: a two-sector analysis. American economic review, 1970, pp. 126-142. (JSTOR) E Lazear, Personnel economics. Cambridge: MIT Press, 1995. (R) T Lemieux and D Card, Education, earnings, and the `Canadian G.I. Bill.' Canadian Journal of Economics, 2001, pp. 313-344. (R) C Moehling, Women's work and men's unemployment. Journal of economic history, 2001, pp. 926-949. (R) F Levy and R Murnane, US Earnings levels and earnings inequality: a review of recent trends and proposed explanations. Journal of economic literature, 1992, pp. 1333-1381. (JSTOR) K Milligan, Subsidizing the stork: new evidence on tax incentives and fertility NBER working paper 8845, 2002. (Available at www.nber.org, follow the links to the working paper series.) G Oettinger, An empirical analysis of the labour supply of baseball stadium vendors. Journal of Political Economy, 1999, pp 360-392. (JSTOR) Course outline This is a rough outline of how the course will proceed. Reading marked *** are for reference purposes. We will announce any changes to the schedule and/or readings in lecture, class, and on the web. Section A Foundations taught by C Minns 1. Introduction Borjas chapter 1 Ehrenberg and Smith chapters 1,2
2. Labour supply Borjas chapters 2,3 Moehling 2001 Oettinger 1999 *** Camerer et al 1997 *** Ehrenberg and Smith chapters 6,7 3. Labour demand and market equilibrium Adams and Neumark, 2003 Borjas chapters 4,5 Card and Krueger, 1994 Carrington, 1996 Ehrenberg (ed.), 1995 *** Blinder and Choi 1988 *** Card and Krueger, book *** Ehrenberg and Smith chapter 3,4,5 Section B Household labour supply and the allocation of time taught by M Rizov 4. Labour supply and public policy Borjas chapter 3 Dolton and O Neil, 1996 *** Foley 2004 *** Ehrenberg and Smith chapter 6 5. Fertility, family, and the life-cycle Borjas chapter 3, pp. 69-88 Bardhan and Udry chapter 3 Milligan NBER *** Ehrenberg and Smith chapter 7 6. Household economics Borjas chapter 3, pp. 88-100 Bardhan and Udry chapter 2 Benjamin 1992
Section C Explaining wage differences between workers taught by C Minns 7. Compensating differentials and human capital Angrist and Krueger QJE 1991 Borjas chapters 6, 7 Lemieux and Card CJE 2001 *** Ehrenberg and Smith chapters 9,10 8. Discrimination Borjas chapter 10 Goldin and Rouse AER 2000 *** Ehrenberg and Smith chapter 12 9. Immigration Borjas chapter 9 Borjas, Heaven's Door chapter 1, Borjas AER 1987 Card ILRR 1990 *** Borjas, Heaven s door, chapters 2 and 3 *** Chiswick 1978 *** Ehrenberg and Smith chapter 10 *** Friedberg and Hunt JEP 1995 Section D further topics on labour markets and development taught by M Rizov 10. Incentive pay (Personnel economics) Borjas chapter 12 Carmichael 1989 *** Ehrenberg and Smith chapter 11 *** Lazear 1995 11. Explaining wage inequality Borjas chapter 8 Levy and Murnane 1992 *** Borjas, Freeman, Katz 1996 *** Ehrenberg and Smith chapter 14
12. Unemployment and development Borjas chapter 13 Bardhan and Udry chapter 4 Harris and Todaro 1970 *** Ehrenberg and Smith chapter 15