Steven G. Allen Walter Wessels
Nelson 2126 Nelson 4106
1. To survey the principal problems, models, and results in labor economics.
2. To develop the theoretical and empirical tools for doing research in labor economics.
ECG 700 and at least one course in econometrics or regression analysis. Students without any previous courses in labor economics should read the relevant chapters in Ehrenberg and Smith, Modern Labor Economics (1999, 7th ed.) before beginning each section.
Problem sets (3) 21%
Human capital problems
Short papers (3) 30%
Class and labor workshop 20%
Course paper 29%
The course will be team taught by Professors Steve Allen and Walter Wessels. Each will teach half of the course and, in their half, assign and grade problem sets, short papers, and classroom presentations. Both professors will grade the course paper.
The short papers should (1) evaluate a journal article or working paper or (2) replicate or extend the empirical work done in an article. You must write at least one paper from each category. Papers should be about five pages long and should be original. Plagiarized papers will result in failure in the course.
The course paper will be an original research paper or a survey of a manageable number of papers on the same subject. You may expand one of your short papers into the course paper. The course paper will be due December 14. It should be about 15 pages long.
Most classes will include lecture with questions and discussion. Be prepared for each class by reading the starred papers on the reading list. In some class periods you will make a presentation on papers on the reading list, papers assigned to you, or your own work. You also are expected to attend the labor workshop, which generally meets on the first and third Wednesday of each month.
Daniel S. Hamermesh, Labor Demand, Princeton, 1996, paperback
Readings marked by an asterisk are required. All readings are on reserve in the library or are available from the library or other sources on the web. Many of the papers published before 1996 can be found in the JSTOR archive. A number of good surveys can be found in Volumes 1 and 2 of Handbook of Labor Economics, Orley Ashenfelter and Richard Layard, Eds. (North-Holland, 1986) and volumes three of Handbook of Labor Economics, Orley Ashenfelter and David Card, Eds. (North-Holland, 1999). These are on reserve in the Library.
I. Data and Methodological Issues. Click here to learn more about data sources in labor economics.
*Joshua Angrist and Alan Krueger, “Empirical Strategies in Labor Economics,” in Orley Ashenfelter and David Card (eds.), Handbook of Labor Economics, Vol. 3A, Amsterdam: North-Holland, 1999, pp. 1277-1366. Available online at http://www.irs.princeton.edu/pubs/pdfs/401.pdf.
*Daniel Hamermesh, “The Craft of Labormetrics,” Industrial and Labor Relations Review, April 2000, pp. 363-380. Available online at Business Source Elite.
Marilyn Manser, “Existing Labor Market Data: Current and Potential Research Uses,” in John Haltiwanger, Marilyn Manser, and Robert Topel (eds.), Labor Statistics Measurement Issues, National Bureau of Economic Research Studies in Income and Wealth, Vol. 60, Chicago: University of Chicago, 1998, pp. 9-46.
Zvi Griliches, "Economic Data Issues," in Zvi Griliches and Michael Intriligator (eds.), Handbook of Econometrics, Volume III, North-Holland, 1986. Available online at: http://www.elsevier.com/hes/books/02/03/025/0203025.pdf
II. Labor Demand
A. Static Theory
*Daniel Hamermesh, Labor Demand, ch. 2.
B. Empirical Specifications
*Daniel Hamermesh, Labor Demand, ch. 3.
C. Static Applications
*Daniel Hamermesh, Labor Demand, ch. 5.
Caroline Hoxby, “How Teachers’ Unions Affect Educational Production,” Quarterly
Journal of Economics, August 1996, pp. 671-718. Available online at JSTOR or
Expanded Academic ASAP database
Jonathan Gruber, “The Incidence of Payroll Taxation: Evidence from Chile,” Journal of
Labor Economics, July 1997, Part 2, pp. S72-S101. Available online at ABI-Inform or Expanded Academic Database
Jennifer Hunt, “Has Work-Sharing Worked in Germany?” Quarterly Journal of Economics, February 1999, pp. 117-148. Available online at Expanded Academic ASAP database
George Borjas, “Immigrants, Minorities, and Labor Market Competition,” Industrial and Labor Relations Review, April 1987, pp. 382-393. Available online at Expanded Academic ASAP database
D. Dynamic Models and Applications
*Daniel Hamermesh, Labor Demand, chs. 6-8.
*Daniel Hamermesh and Gerard Pfann, “Adjustment Costs in Factor Demand,” Journal of Economic Literature, September1996, pp. 1264-1292. Available online at JStor
E. Dynamic Applications
Jaime Saavedra-Chanduví and Máximo Torero, “Labor Market Reforms and Their Impact on Formal Labor Demand and Job Market Turnover: The Case of Peru,” Interamerican Development Bank Working Paper R-394, May 2000. Available online at http://www.iadb.org/RES/pdf/R-394.pdf
Anderson, “Linear Adjustment Costs and Seasonal Labor Demand: Evidence from
Retail Trade Firms,” Quarterly Journal
of Economics, November 1993, pp. 1015-1042.
Available online at JSTOR or Expanded
Academic ASAP database
Marc A. Van Audenrode, “Short-Time Compensation, Job Security, and Employment Contracts: Evidence from Selected OECD Countries,” Journal of Political Economy, February 1994, pp. 76-102. Available online at JStor
Daron Acemoglu and Joshua Angrist, “Consequences of Employment Protection? The Case of the Americans with Disabilities Act,” Journal of Political Economy, forthcoming. Available online at http://econ-www.mit.edu/faculty/acemoglu/files/papers/jpe.pdf
III. Labor Supply
A. Static Models
*John Pencavel, "Labor Supply of Men: A Survey," Handbook of Labor Economics, Volume 1, 1986, pp. 3-44.
*Mark Killingsworth and James Heckhan, “Female Labor Supply: A Survey,” Handbook of Labor Economics, Volume 1, 1986, pp.103-144.
*Richard Blundell and Thomas MaCurdy, “Labor Supply: A Review of Some Alternative Approaches,” Handbook of Labor Economics, Volume 3A, 1999, pp. 1559-1591.
B. Empirical Specifications
*Pencavel, op cit, pp. 51-83, 94-95.
*Killingsworth and Heckman, op cit, pp. 179-197.
Blundell and MaCurdy, op cit, pp. 1591-1689.
*Ernst Berndt, The Practice of Econometrics, Reading: Addison-Wesley, 1991, ch. 11, pp. 614-644. On reserve.
Mark Killingsworth, Labor Supply, Cambridge: Cambridge University Press, 1983, ch. 4. On reserve.
James Heckman, "Sample Selection Bias as a Specification Error," in James P. Smith (ed.), Female Labor Supply. On reserve.
*Thomas Mroz, "The Sensitivity of an Empirical Model of Married Women's Hours of Work to Economic and Statistical Assumptions," Econometrica, July 1987, pp. 765-800. JStor
*James Heckman, "What Has Been Learned About Labor Supply in the Past Twenty Years?" American Economic Review, May 1993, pp. 116-131. JStor
Robert Moffitt, "The Econometrics of Kinked Budget Constraints," Journal of Economic Perspectives, Spring 1990, pp. 119-139. JStor
C. Empirical Applications
Jonathan Gruber, “ Disability Insurance Benefits and Labor Supply,” Journal of Political Economy, December 2000, pp. 1162-1183. E-Journal subscription
Richard Blundell, Alan Duncan, and Costas Meghir, “Estimating Labor Supply Responses Using Tax Reforms,” Econometrica, July 1998, pp. 827-862.
Bruce Meyer and Dan Rosenbaum, “Welfare, the Earned Income Tax Credit, and the Labor Supply of Single Mothers,” Quarterly Journal of Economics, August 2001, pp. 1063-1115. Expanded Academic ASAP database
Gerald Oettinger, “An Empirical Analysis of the Daily Labor Supply of Stadium Vendors,” Journal of Political Economy, April 1999, pp. 360-392. E-Journal subscription
*Pencavel, op cit, pp. 44-51, 83-94.
*Mark Killingsworth, Labor Supply, Cambridge, 1983, ch. 5, pp. 207-239.
Thomas MaCurdy, "An Empirical Model of Labor Supply in a Life-Cycle Setting," Journal of Political Economy, December 1981, pp. 1059-1085. JStor
*David Card, "Intertemporal Labor Supply: An Assessment," NBER Working Paper No. 3602, January 1991. (Published in Chris Sims (ed.), Advances in Econometrics, Sixth World Congress, Vol. II, Cambridge: Cambridge University Press, 1994.)
Martin Browning, Angus Deaton, and Margaret Irish, “A Profitable Approach to Labor Supply and Commodity Demands over the Life-Cycle,” Econometrica, May 1985, pp. 503-544. JStor
*Robin Lumsdaine and Olivia Mitchell, “New Developments in the Economic Analysis of Retirement,” in Ashenfelter and Card (eds.) Handbook of Labor Economics, Vol. 3C, 1999, pp. 3261-3307.
Orley Ashenfelter and David Card, “Did the Elimination of Mandatory Retirement Affect Faculty Retirement Flows?” NBER Working Paper No. 8378, July 2001. Available online at http://papers.nber.org/papers/W8378.pdf
Steven Allen, Robert Clark, and Linda Ghent, “Phasing Into Retirement,” NBER Working Paper, forthcoming.
IV. Changes in the Wage Structure
A. Basic Facts
*Lawrence Katz and David Autor, “Changes in the Wage Structure and Earnings Inequality,” Handbook of Labor Economics, Volume 3A, 1999, pp. 1463-1555.
*Chinhui Juhn, Kevin M. Murphy, and Brooks Pierce, “Wage Inequality and the Rise in Returns to Skill,” Journal of Political Economy, June 1993, pp. 410-442. JStor
John Bound and George Johnson, “Changes in the Structure of Wages in the 1980s: An Evaluation of Alternative Explanations,” American Economic Review, June 1992, pp. 371-392. Jstor
Lawrence Katz and Kevin M. Murphy, “Changes in Relative Wages, 1963-1987: Supply and Demand Factors,” Quarterly Journal of Economics, February 1992, pp. 35-78. Jstor
David Card and Thomas Lemieux, “Can Falling Supply Explain the Rising Return to College for Younger Men? A Cohort-Based Analysis,” Quarterly Journal of Economics, May 2001, pp. 705-746. Available online at Expanded Academic ASAP database
*Peter Gottschalk and Timothy Smeeding, “Cross-National Comparisons of Earnings and Income Inequality,” Journal of Economic Literature, June 1997, pp. 633-687. JStor
Richard Freeman and Lawrence Katz, Differences and Changes in Wage Structures, Chicago: University of Chicago, 1995, pp. 1-22.
B. Role of Technological Change
*Daron Acemoglu, “Technical Change, Inequality, and the Labor Market,” Journal of Economic Literature, forthcoming. Available online at http://econ-www.mit.edu/faculty/acemoglu/files/papers/jelrev3.pdf
David Autor, Lawrence Katz, and Alan Krueger, “Computing Inequality: Have Computers Changed the Labor Market?” Quarterly Journal of Economics, November 1998, pp. 1169-1213. Available online at Expanded Academic ASAP database
Alan Krueger, “How Computers Have Changed the Wage Structure: Evidence from Microdata, 1984-1989,” Quarterly Journal of Economics, February 1993, pp. 33-60. JStor
Eli Berman, John Bound, and Zvi Griliches, “Changes in the Demand for Skilled Labor within U.S. Manufacturing: Evidence from the Annual Survey of Manufactures,” Quarterly Journal of Economics, May 1994, pp. 367-397. JStor
*Richard Freeman, “Are Your Wages Set in Beijing?” Journal of Economic Perspectives, Summer 1995, pp. 15-32. JStor
Paul Krugman, “Technology, Trade and Factor Prices,” Journal of International Economics, February 200, pp. 51-71. Available online from Science Direct
Robert Feenstra and Gordon Hanson, “Global Production Sharing and Rising Inequality: A Survey of Trade and Wages,” NBER Working Paper No. 8372, July 2001. Available online at http://papers.nber.org/papers/W8372.pdf
D. Labor Market Institutions
*John DiNardo, Nicole Fortin, and Thomas Lemieux, “Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach,” Econometrica, September 1996, pp. 1001-1044. JStor
David Lee, “Wage Inequality in the United States During the 1980s: Rising Dispersion or Falling Minimum Wage?” Quarterly Journal of Economics, August 1999, pp. 977-1025. Available online at Expanded Academic ASAP database
David Card, “The Effect of Unions on Wage Inequality in the U.S. Labor Market,” Industrial and Labor Relations Review, January 2001, pp. 296-315. Available online at Business Source Elite.
Gary Becker, Human Capital (2nd edition), Chapter 2, 1975 On reserve.
Theodore Schultz, “The Value of the Ability to Deal with Disequilibria,” Journal of Economic Literature, September 1975, 827-846. JStor
Michael Spence, “Job Market Signaling,” Quarterly Journal of Economics, August 1973, 355-374. JStor
Robert Willis, “Wage Determinants: A Survey and Reinterpretation of Human Capital Earnings,” Chapter Ten in Handbook of Labor Economics, Volume I, 1986.
B. Evidence: Returns To Schooling
Card, David, “The Causal Effect of Schooling on Earnings,” Chapter 30 in Ashenfelter and Card, Handbook of Labor Economics, 1999, volume 3A.
Robert Willis and Sherwin Rosen, “Education and Self-Selection,” Journal of Political Economy, October 1979, part 2, S7-S36. JStor
Orley Ashenfelter and Cecilia Rouse, “Income, Schooling, and Ability: Evidence from a Sample of Identical Twins,” Quarterly Journal of Economics, February 1998, 253-84.
Fulltext Expanded Academic Database
Andrew Weiss, “Human Capital vs. Signaling Explanation of Wages, Journal of Economic Perspectives, 1995. JStor
Wessels, Walter, "Do Unionized Firms Hire Better Workers?" Economic Inquiry, October 1994: 616-629.
Wessels, Walter, "Do Unions Contract for More Employment?" The Industrial and Labor Relations Review, 45, October 1991: 181-193.