Course Meeting Times

Lectures: 2 sessions / week, 1.5 hours / session

Recitations: 1 session / week, 1.5 hours / session

Course Overview

The aim of this course is to acquaint students with traditional topics in labor economics and to encourage the development of independent research interests. We will cover a systematic development of the theory of labor supply, labor demand, and human capital. Topics include wage and employment determination, turnover, search, immigration, unemployment, equalizing differences, and institutions in the labor market. There will be particular emphasis on the interaction between theoretical and empirical modeling. Prerequisites are intermediate microeconomics and a course in econometrics.

Class Requirements

3 problem sets 30%
Empirical project 30%
Final exam 40%


I. Labor market facts and trends
1 Labor markets  
II. Neoclassical labor supply
2 Basics; review of duality  
3-4 Tax and transfer programs; theoretical and empirical analysis of negative income tax (NIT) programs  
5 The life-cycle model; theory; the Institute of Statistics and Econometrics; basic panel econometrics Problem set 1 due
6 Cab drivers, stadium vendors, and bicycle messengers  
7 Household family models; theory of time allocation; IV/Wald estimators  
8 Quantity/quality trade-offs  
III. Labor demand, immigration, minimum wages, unions
9 Neoclassical demand theory; review of Hicks-Marshall formulas  
10 Empirical studies of immigration effects  
11 Minimum wages; review of monopsony  
12 Differences-in-differences methods; the M&M controversy Problem set 2 due
13-14 Union relative wage effects; bargaining and efficient contracts  
IV. Human capital
15 Schooling experience and earnings; basic theory; ability bias  
16-17 Signaling; returns to schooling econometrics  
18 Returns to experience and on-the-job training (OJT)  
19 Education production: school inputs, school quality, student and teacher incentives  
20 Competition and regulation  
21 Human capital policy; higher education  
22-23 Evaluation of government training programs  
24 Externalities and peer effects Problem set 3 due
V. Discrimination
25 Theory; wage gaps  
26 Anti-discrimination policy  
  Final exam