Department of Economics The University of Melbourne 316 411\316-651: Labour Economics Semester 2, 2009 Course Outline Lecturer in Charge Dr. Andrew Clarke Room 611, Economics & Commerce Building Telephone: 8344 5298 Email: andrew.clarke@unimelb.edu.au Office Hours: Tuesdays 10:00am 12:00pm Lectures Wednesdays: 12.30pm 2:00pm [Old Arts, Room 205] Thursdays: 12:00pm 1:30pm [Old Arts, Room 205] The lecture slides will be available for downloading before each lecture. The lecture slides and other course material may be accessed from the Labour Economics web pages on the University s Learning Management System (LMS): http://www.lms.unimelb.edu.au/login/ Course Description This course is a survey of several topics in (modern) labour economics at an advanced level. A solid background in microeconomics and econometrics is required. In each topic relevant theory and empirical research will be examined. 1
There will be no required textbook for the course. Instead, the following course outline contains a few references that we will discuss in class. Occasionally, we might also discuss readings that do not appear on this course outline. A useful reference for much of the course is: Cahuc, Pierre & Zylberberg André (2004). Labor Economics. MIT Press I do not recommend that you buy this book unless you are really interested in labour economics. It is quite expensive and includes much more material than will be covered in the course. A copy of this book has been placed on reserve in the Ballieu library. Topics to be covered include labour supply (including dynamic aspects of the labour supply decision), labour demand, wage determination (compensating wage differentials, human capital, labour market discrimination), immigration, wage inequality, and unemployment with an emphasis upon the search-theoretic approach to labour markets. Assessment 1. 2-hour exam [70 percent of final grade]. This exam will be held during the examination period and will cover all material covered in the course including the lectures, the problem sets, and the readings. 2. Problem Sets [20 percent of final grade]. 3. Article Report [10 percent of final grade]. This should be short (6 7 double spaced typed pages) and should summarize and critique a recent journal article or working paper that has been approved by me in advance. This should be independent and original work, expressed in your own words. This article report will be due on Friday September 18. Plagarism\Cheating The University has clear rules regarding plagarism. Any student or group of students who copies from or otherwise uses the answer of any other person engaged in the performance of the same or comparable component of assessment or permits any other person(s) to copy from or otherwise use his or her answer, may be deprived of credit for the whole or part of any assessment within the subject and will appear before the University s Student Discipline Committee. 2
Course Outline Readings marked with a star (*) denote papers that we will discuss quite closely in the class and represent required reading. The remaining references might not be discussed directly in the course but have been included for those interested in further reading. There may be some variation in the starred references during the semester. 1 Some General References Angrist Joshua D. & Krueger Alan D. (1999). Empirical Strategies in Labor Economics. In Ashenfelter. O.C & Card, D. (Eds) Handbook of Labor Economics Volume IIIA Angrist Joshua D. & Krueger Alan D. (2001). Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments. Journal of Economic Perspectives. 15(4). pp69 85 Cahuc, Pierre & Zylberberg André (2004). Labor Economics. MIT Press Cobb-Clark, Deborah A. & Crossley, Thomas F. (2003). Econometrics for Evaluations: An Introduction to Recent Developments. Economic Record. 79. pp491 511 Rosenzweig, Mark R. & Wolpin, Kenneth I. (2000). Natural Natural Experiments in Economics. Journal of Economic Literature. 38(4). pp827 874 2 Labour Supply Angrist, Joshua D & Evans, William N. (1998). Children and Their Parents Labor Supply: Evidence from Exogenous Variation in Family Size. American Economic Review. 88(3). pp450 477 *Heckman, James J. (1993). What Has Been Learned About Labor Supply in the Past Twenty Years?. American Economic Review. 83(2). pp 116 121 Imai, Susumu & Keane Michael P. (2004) Intertemporal Labor Supply and Human Capital Accumulation. International Economic Review. 45(2). pp601 641 Keane, Michael P. & Wolpin, Kenneth I. (1997) The Career Decisions of Young Men. Journal of Political Economy. 105(3). pp473 522 *MaCurdy, Thomas E. (1981). An Empirical Model of Labor Supply in a Life Cycle Setting. Journal of Political Economy. 89. pp 1059 1085 Mroz, Thomas A. (1987). The Sensitivity of an Empirical Model of Married Women s Hours of Work to Economic and Statistical Assumptions. Econometrica. 55(4). pp 765 799 *Scutella, Rosanna (2000). Labour Supply Estimates for Married Women in Australia. Australian Journal of Labour Economics. 4(3). pp152 172 3
3 Labour Demand *Card, David & Krueger, Alan B. (1994) Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania. American Economic Review. 84(4). pp 772 793 *Hamermesh, Daniel S. (1993) Labor Demand. Princeton University Press. Chapters 1 5 Hamermesh, Daniel S & Trejo, Stephen J. (2000). The Demand for Hours of Labor: Direct Evidence from California. Review of Economics and Statistics. 82(1). pp 38 47 DiNardo, John and Pischke, Jorn-Steffen (1997). The Returns to Computer Use: Have Pencils Changed the Wage Structure Too?. Quarterly Journal of Economics. 112(1). pp 291 303 Krueger, Alan D (1993). Have Computers Changed the Wage Structure: Evidence from Microdata 1984 1989. Quarterly Journal of Economics. 108(1). pp 33 60 Leigh, Andrew (2003). Employment Effects of Minimum Wages: Evidence from a Quasi-Experiment. The Australian Economic Review. 36(4). pp361 373 4 Wage Determination and Labour Market Discrimination (a) Compensating Wage Differentials *Brown, Charles. (1980). Equalizing Differences in the Labor Market. Quarterly Journal of Economics. 94(1). pp 113 134 *Hwang, Hae-shin & Reed, Robert W. & Hubbard, Carlton. (1992). Compensating Wage Differentials and Unobserved Productivity. Journal of Political Economy. 100(4). pp 835 858 *Edwards, Rebecca (2006). Maternity Leave and the Evidence for Compensating Differentials in Australia. Economic Record. 82. pp281 297 (b) Human Capital *Ashenfelter, Orley & Krueger Alan (1994). Estimates of the Economic Return to Schooling from a New Sample of Twins. American Economic Review. 84(5). pp1157-1173 *Card, David (1993). Using Geographic Variation in College Proximity to Estimate the Return to Schooling. NBER Working Paper No. 4483. *Card, David. (1999). The Causal Effect of Education of Earnings. In Ashenfelter. O.C & Card, D. (Eds) Handbook of Labor Economics Volume IIIA *Carneiro, Pedro & Heckman James J. (2002). The Evidence on Credit Constraints in Post-Secondary Schooling. Economic Journal. 112. pp705 734 Farber, Henry S (1999). Mobility and Stability: The Dynamics of Job Change in Labor Markets In Ashenfelter. O.C & Card, D. (Eds) Handbook of Labor Economics Volume IIIB 4
Heckman, James J. & Honoré, B.E. (1990). The Empirical Content of the Roy Model. Econometrica. 58(5). pp 1121 1149 *Miller, Paul and Mulvey, Charles and Martin, Nick (1995). What do Twins Studies Reveal about the Economic Returns to Education? A Comparison of Australian and U.S. Findings. American Economic Review. 85(3). pp586 599 *Topel, Robert (1991). Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority. Journal of Political Economy. 99(1). pp 145 176 Weiss, Andrew (1995). Human Capital vs. Signalling Explanations of Wages. Journal of Economic Perspectives. 9(4). pp 133 154 *Leigh, Andrew & Ryan, Chris (2005). Estimating Returns to Education: Three Natural Experiment Techniques Compared. Centre for Economic Policy Research (CEPR) Discussion Paper No. 493, Australian National University (c) Discrimination Heckman, James J. (1998). Detecting Discrimination. Journal of Economic Perspectives. 12(2). pp 101 116 *Neal, Derek A. & Johnson, William R. (1996). The Role of Premarket Factors in Black-White Wage Differences. Journal of Political Economy. 104(5) pp 869 895 5 Immigration Aydemir, Abdurrahman & Skuterud, Mikal (2005). Explaining the Deteriorating Entry Earnings of Canadian Immigrant Cohorts 1966 2000. Canadian Journal of Economics. 38(2). pp 641 671 Borjas, George J. (1985). Assimilation, Changes in Cohort Quality, and the Earnings of Immigrants. Journal of Labor Economics. 3(4). pp 463 489 Borjas, George J. (1985). Assimilation and Changes in Cohort Quality Revisited: What Happened to Immigrant Earnings in the 1980 s. Journal of Labor Economics. 13(2). pp 201 245 Borjas, George J. (1987). Self-Selection and the Earnings of Immigrants. American Economic Review. 77(4). pp531 553 *Borjas, George J. (1994). The Economics of Immigration. Journal of Economic Literature. 32(4). pp 1667 1717 Card, David (1990). The Impact of the Mariel Boatlift on the Miami Labor Market. Industrial and Labor Relations Review. 43(2). pp 245 257 6 Wage Inequality Autor, David H. & Katz, Lawrence F. & Kearney, Melissa S. (2004). Trends in U.S. Wage Inequality: Re-Assessing the Revisionists. Unpublished manuscript. Harvard University *Card, David & DiNardo, John E. (2002). Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles. Journal of Labor Economics. 20(4). pp 733 783 5
Card, David & Lemieux, Thomas (2001). Can Falling Supply Explain the Rising Return to College for Younger Men? A Cohort-Based Analysis. Quarterly Journal of Economics. 116. pp 705 746 *DiNardo, John & Fortin, Nicole M & Lemieux, Thomas (1998). Labor Market Institutions and the Distribution of Wages 1973 1992: A Semi-parametric Approach. Econometrica. 64(5). pp 1001 1044 Katz, Lawrence F & Autor, David H. (1999). Changes in the Wage Structure and Earnings Inequality In Ashenfelter. O.C & Card, D. (Eds) Handbook of Labor Economics Volume IIIB Lemieux, Thomas (2002). Decomposing Changes in Wage Distributions: A Unified Approach. Canadian Journal of Economics. 35(4). pp 646 688 *Wilkins, Roger (2003). Immigrant and Native-Born Earnings Distributions in Australia: 1982 1996. Australian Journal of Labour Economics. 6(1). pp 83 115 *Miller, Paul W. (2005). The Role of Gender Among Low-Paid and High-Paid Workers. The Australian Economic Review. 38(4). pp 405 417 7 Unemployment Bontemps, Christian & Robin, Jean-Marc & van den Berg, Gerard (1999). An Empirical Equilibrium Job Search Model with Search on the Job and Heterogenous Workers and Firms. International Economic Review. 40(4). pp 1039 1074 Bowlus, Audra J. & Kiefer, Nicholas M. & Neumann, George G. (1995). Estimation of Equilibrium Wage Distributions with Heterogeneity. Journal of Applied Econometrics. 10. pp S119 S131 *Burdett, Kenneth & Mortensen, Dale T. (1998). Wage Differentials, Employer Size and Unemployment. International Economic Review. 39(2). pp 257 273 Devine, Therese J. & Kiefer, Nicholas M. (1991). Empirical Labor Economics: The Search Approach. Oxford University Press Eckstein, Zvi & van den Berg, Gerard J. (2003). Survey. IZA Discussion Paper No 929 Empirical Labor Search: A *van den Berg, Gerard (1999). Empirical Inference with Equilibrium Search Models of the Labor Market. Economic Journal. 109. ppf283 F306 *Jones, Stephen R. G. (1988). The Relationship between Unemployment Spells and Reservation Wages as a Test of Search Theory. Quarterly Journal of Economics. 103. pp 741 765 *Jones, Stephen, R.G. & Riddell, Craig W. (1999). The Measurement of Unemployment: An Empirical Approach. Econometrica. 67(1). pp 147 162 *Kiefer, Nicholas M. (1988). Economic Duration Data and Hazard Functions. Journal of Economic Literature. 26. pp 646 679 Kiefer, Nicholas M. & Neumann, George R. (1979). An Empirical Job-Search Model, with a Test of the Constant Reservation-Wage Hypothesis.Journal of Political Economy. 87(1). pp 89 107 6
Kuhn, Peter & Skuterud, Mikal (2004). Internet Job Search and Unemployment Durations. American Economic Review. 94(1). pp 218 232 Mortensen, Dale T (2003). Wage Dispersion: Why are Similar Workers Paid Differently?. MIT Press Hwang, Hae-shin, Mortensen, Dale T, & Reed, Robert (1998). Hedonic Wages and Labor Market Search. Journal of Labor Economics. 16(4). pp815 847 7