The purpose of this course is to introduce important topics, theories, institutions, andpolicy issues relating to the functioning of labor markets. Topics to be consideredinclude labor supply decisions, investments in human capital, compensating wagedifferentials, firms’ labor demand decisions, unions, compensation programs, theeconomics of unemployment, and labor market discrimination. The course will beginwith the analysis of the neo-classical labor supply, demand and equilibrium. Then, wewill move on to analyze the possible reasons why labor market outcomes may deviatefrom what the perfectly competitive neo-classical model predicts: human capitalaccumulation choices, productivity heterogeneity, institutional rigidities (e.g.,minimum wage, unions), labor mobility and discrimination.

In the end, you should come away with some general, empirical knowledge of labormarkets in the United States and, more importantly, an idea of how economistsattempt to explain the various phenomenon observed in these markets.

 

1. Understand how economists attempt to explain the labor market

2. Use the neo-classical model to understand the underlying forces that shapelabor market outcomes.

3. Critically assess the choices made by workers and firms in the context ofoptimizing agents.

4. Understand what Human Capital is, how it is acquired and how it shapeslabor market outcomes.

 

Learning Objectives:

 

Distinguish the major determinants of labor market participation and hoursworked.

Analyze how welfare programs and business cycles affect labor supply.

Derive the short and long term demand for labor.

Construct a detailed demand and supply model of the labor market.

Find the equilibrium labor market outcomes in the context of the neoclassical model.

Analyze the role played by jobs’ and workers‘ characteristics in generatingwage differentials.

Develop a schooling model that explains human capital investment.

Distinguish factors that affect earnings inequality and labor marketdiscrimination.