Albion College – Fall 2012
Economics & Management 354: Labor Economics
Professor Greg Saltzman
Office: Room 101 Robinson, tel. 0422, E-mail GSaltzman@albion.edu
Home telephone: (734) 971-7596 (not after 9:30 PM, please)
Office hours: MTuWTh 10:00 – 11:00 AM
Please feel free to stop by my office without an appointment, though you can make an
appointment if you wish. I am frequently in my Albion office at the following times:
Mondays
9:40-11:50 AM
Tuesdays
9:40-11:50 AM
Wednesdays 9:40-11:50 AM
Thursdays
9:40-11:50 AM
Fridays
Almost never (usually in Ann Arbor)
If you make prior arrangements with me, then I am also happy to meet with you in my office
most Mondays, Tuesdays, Wednesdays, and Thursdays from 11:50 AM to 12:50 PM.
Course Meetings:
Tuesdays and Thursdays, 2:15-4:05 PM, Olin 217
Prerequisites: E&M 101 is the only required prerequisite. However, E&M 102, E&M 230, and
a semester of statistics are recommended. Homework assignments and exams will require
students to use economic tools such as supply-demand diagrams, indifference curves, or present
value calculations.
An investigation of labor market decisions and outcomes; topics include labor supply and
demand, earnings, discrimination and unemployment.
This course meets the Albion College category requirement in ethnicity studies. It is a required
course for the E&M major with emphasis in human resources; and it is a restricted elective for
the E&M major, the E&M major with emphasis in economics, the Public Policy major, and the
Economics minor.
What’s this course about?
Labor markets comprise the suppliers of labor (workers), the demanders of labor (employers),
and the resulting pattern of wages, employment, and income. This course is designed to
introduce you to the theories and tools that economists use to analyze labor markets, as well as
some of the results yielded by this analysis. Special attention will be paid to the current and
historical labor market outcomes of racial and ethnic minorities in relation to their majority
counterparts. Some of the questions we will address include: Who works what jobs and why?
How are a worker’s wages determined? Does education make workers more productive? How
do unions affect labor markets? How does immigration affect labor markets? What impact does
a worker’s race and gender have on his or her labor market outcome?
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Learning Objectives:
At the conclusion of this course you should be able to:
 Understand at a basic level the models and statistical techniques economists use to
analyze labor markets
 Interpret critically the results of these analyses
 Gather and interpret economic information relating to labor and labor policy
 Formulate and communicate arguments based on sound and accepted data and models
Required Text:
Ronald G. Ehrenberg and Robert S. Smith, Modern Labor Economics:
Theory and Public Policy, 11th ed. (© 2012, ISBN-10: 0132540649).
Other Required Readings: available on the course web for this course,
http://courses.albion.edu/course/view.php?id=565
Grading and Course Requirements
Course Requirement
First exam (chs. 1-4, 6)
Second exam (chs. 5, 7-11, plus
some course web readings)
Third exam (chs. 12-16, plus
some course web readings)
Debate paper
Debate
Two or three problem sets
Due Date
Thursday, September 20
Grading Weight
25%
Thursday, October 25
25%
Tuesday, November 27
25%
Tuesday, December 4
Tuesday & Thursday, December 4 & 6
to be determined
12.5%
12.5%
ungraded
Tests
There will be three tests. The third test covers only the final third of the course. Tests will be a
mix of multiple choice questions, quantitative problems, and short answer questions that will
require you to discuss briefly the nature and importance of economic concepts. There will be no
test for this course during finals week (December 10-13).
Tests will be graded on a curve. Most students will receive between a 3.0 and a 3.7, probably a
couple will receive a 4.0, and some will receive a 2.7 or lower. There need not be any grades
below 2.0, but I am prepared to assign grades as low as 0.0 if I believe that the quality of a
student’s work is poor.
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Debates
At the end of the semester we will have four in-class debates. The four debate topics will be
chosen from the following list of five:
Debate A: Is a worker’s skill the most important determinant of his or her compensation?
Debate B: Does the presence of labor unions in an industry help most workers in that industry
(or most of the workers who would be in that industry if there were no unions)?
Debate C: Would more restrictive immigration policies (i.e., making it harder for immigrants to
enter the U.S.) improve the labor market outcomes for domestic workers?
Debate D: Is racism the predominant cause of racial economic inequality in the U.S. today?
Debate E: Do minimum wage laws benefit unskilled workers, as a group?
Each debate will have a “pro” or “yes” group and a “con” or “no” group, with 1 or 2 students in
each group. Each debate should incorporate the issues of race and ethnicity, and whether these
factors play an important role in determining the answer to the debate question. A complete
description of the debate format and expectations is at the conclusion of this syllabus.
Please think about which debate topic you prefer and which position (pro or con) you wish to
argue. I will ask you in class on Tuesday, October 9, to rank your choices as to debate topic
and position. I will try to accommodate your preferences to the extent I can when assigning
students to debate topics and positions.
Every student must submit an individual 4 to 6-page paper that details your argument. The paper
should also state and respond to what you as the strongest arguments against your position.
These papers are due no later than the beginning of class on Tuesday December 4.
Format of In-Class Debates
The debates are designed to last 40 minutes but may require 50 minutes. Please arrive on or
before time on days on which debates are scheduled. The structure of the debates is
approximately as follows:

Opening Statement of Pro Group (2 min)

Opening Statement of Con Group (2 min)

Con Group Question to Pro Group (2 min response, 2 minute rebut by Con Group)

Pro Group Question to Con Group (2 min response, 2 minute rebut by Pro Group)

Con Group Question to Pro Group (2 min response, 2 minute rebut by Con Group)

Pro Group Question to Con Group (2 min response, 2 minute rebut by Pro Group)

Professor Question to Pro Group (2 min response, 2 minute rebut by Con Group)

Professor Question to Con Group (2 min response, 2 minute rebut by Pro Group)
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
Class Question to Pro Group (2 minute response, 2 minute rebut by Con Group)

Class Question to Con Group (2 minute response, 2 minute rebut by Pro Group)

Closing Statement of Con Group (2 min)

Closing Statement of Pro Group (2 min)
Questions by one group to the other, or by the professor to a group may be directed to the group
as a whole or to particular individuals within the group. All group members should participate in
the in-group discussions, even for questions directed to an individual member. Grades for the
debate will be determined both by the quality of the arguments you present in the debates and by
the effectiveness of your speaking style (maintaining eye contact with the audience, speaking
smoothly, etc.). Your debate performance depends to a substantial extent on your group’s work,
but I will also consider the how each individual team member performs in the debate when
assigning individual debate grades.
I encourage each group to begin work on the debate by the end of October so that there is ample
time to prepare.
Debate Paper
To prepare for the in-class debate, you should have discussed the topic at length with the other
members of your team. But I want a sample of each individual student’s written work.
Therefore, I require individual rather than team papers. These papers, 4-6 pages typed double
spaced of text plus a list of works cited, should present your argument in the debate, while also
presenting and responding to what you see as the strongest arguments against your position.
The paper is a way to show that you are able to use what you have learned in this course to
evaluate and analyze a question relevant for labor economists. Wherever possible please enrich
your arguments with evidence, examples, and analysis you have learned in this course. Look at
the footnotes in the textbook and course web readings for other sources of information related to
your topic. Use quotation marks for any direct quotes, and include citations to scholarly
publications supporting your analysis or conclusions (even if you do not quote them directly).
As this course fulfills the Ethnicity Studies Category, I ask that every paper address whether
race or ethnicity affects the answer to the question; if so how; and if not, why not. A
complete, thoughtful argument about the importance of race and ethnicity (that is, one that
considers both why race or ethnicity could be important in determining the answer, and why they
might not be) will be important to the grade earned by the paper.
The length and formatting requirements for the paper are as follows:
 The paper should be between 4 and 6 pages in length, exclusive of the cover page and
pages devoted to endnotes, figures and graphs, and references. (When in doubt, using
fewer, more sharply crafted pages is always preferred.)
 The paper should be double-spaced, with reasonable margins and font size (if you feel
you have to ask, they are probably not reasonable).
 Include a cover page with your name, the debate topic and your stance (i.e. pro or con),
the (optional) title of your paper, the term (i.e. Fall 2012) and the course title and number.
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

You may use whatever accepted citation method you are most comfortable with
(parenthetic, endnote, footnote, etc.), but you must be consistent with your method.
Please number all pages with the exception of the cover page.
Some suggestions you may want to keep in mind include:
 Rigorously adhere to the requirements above. Failure to do so will result in lost points.
 Use your introductory paragraph to provide a well-crafted overview of the position,
purpose, and main arguments of your paper. The better the introduction, the easier a
paper is to read. To this end, writing the introduction last is often a good idea.
 This is not simply a “book report” assignment; your paper should provide original
analysis and arguments, and not simply an overview of the relevant readings, models, etc.
 Use the tools and knowledge you have acquired in this course to analyze the issues
relevant to your paper. Use of analytic graphs and models is highly encouraged. Again,
any pages devoted strictly to this type of analysis can be placed in an appendix and will
not count against your page total.
 Some of the most relevant knowledge may be from units within the course that are less
directly connected to your topic, so be sure to think carefully and completely through
your arguments.
 Start thinking about your paper sooner rather than later. While it is true that you will
continue to gain knowledge and tools throughout the course, and it may well be tempting
to postpone starting your paper, it is often easier to incorporate new insight into an
existing paper than to write an entire paper in an accelerated timeframe.
 Remember that the best papers acknowledge and address the strong counter-arguments to
their position. When making your case it is more powerful to tell both sides of the story
and explain why you believe your side to be the strongest than just to tell your side of the
story.
 Be sure to provide evidence that you made a complete, thoughtful, and careful
consideration of the importance of race and ethnicity to your topic.
 Don’t hesitate to ask me any questions you have about this (or any other) assignment.
Writing guidelines:
 Eliminate errors of spelling, word usage, and grammar. Check your paper for faulty
punctuation, incomplete sentences, and run-on sentences. Pay heed to the spelling and
grammar alerts from your word processing software. Also, pay heed to the “Common
Writing Errors” document on the course web for this course. You may wish to ask
someone at Albion’s Writing Center to review a draft of your paper.
 Make sure that you express your ideas clearly. When in doubt, read your paper to a
roommate or a friend to see if he or she understands what you are trying to say.
 Omit needless words.
 Organize your paper well. Each paragraph should have one central idea, and paragraphs
should be arranged in a logical order.
 Give your readers signals to indicate where you’re going. For example, you could
announce the topic for a paragraph with a sentence such as, “There are three main reasons
why the American labor movement is not socialist.” Transitional sentences or phrases at
the beginning or end of paragraphs may also help your reader.
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Political Controversy
This course addresses politically controversial subjects. I will not base your grade on whether
you agree or disagree with my political views. While the positive nature of economics often
leads us to make conclusions about the efficiency of economic outcomes and institutions, these
conclusions should not be confused as value judgments or an objective assessment of individual
beliefs. Much of the material we will be covering will conjure up deep beliefs, disparate
insights, and contradicting views about issues that many of us feel passionately about. Everyone
should feel comfortable to express any and all questions, beliefs, and views they may have at any
time during this course, without fear of condemnation or judgment. That said, no student should
ever seek simply to provoke or frustrate a fellow student. If, however, you find yourself
frustrated by an opposing point of view or comment, please take this as an opportunity to
challenge, refine, and/or clarify your thinking on the topic. When you do respond, please
remember to try to push the discussion forward, and speak to points of views and arguments, and
not directly to the students who offered them. I think we can all agree that an honest, open, and
inclusive discussion can push everyone’s understanding of the material much farther than would
a discussion where only popular or “safe” opinions are welcome. Let us all try to engage in each
and every discussion with honesty, open minds, and an eye toward true dialogue.
Problem Sets
There will be two or three problem sets. These will be ungraded, but working the problem sets
carefully will help you do better on the tests.
Additional Albion College Information, Policies, and Resources
Academic Integrity
Albion College has adopted the following statement on academic integrity: “As an academic
community, Albion College is firmly committed to honor and integrity in the pursuit of
knowledge. Therefore, as a member of this academic community, each student acknowledges
responsibility for his or her actions and commits to the highest standards of integrity. In doing
so, each student makes a covenant with the college not to engage in any form of academic
dishonesty, fraud, cheating, or theft.”
I encourage the students to work together in study groups on the problem sets and to prepare for
the tests. But you are not permitted to consult anyone else, any books, or any notes (whether
paper or electronic) while you are taking the tests; nor are you permitted to use a cell phone
(even the calculator functions of a cell phone) while you are taking the tests. If you violate this
policy, I will give you a zero on the test and report you to the dean’s office for further
disciplinary action (which can include expulsion from Albion College in cases of second
offenses).
For the debate paper, you must cite your sources for ideas, information, and direct quotations. If
your paper contains a direct quotation from somebody else’s work but does not put this in
quotation marks and cite the source, then I will give you a zero on the paper for plagiarism and
report you to the dean’s office.
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Attendance
It is essential that students show up for class on the days when we have tests. I will not be taking
attendance on other days; but students who attend class regularly and are attentive in class
systematically learn more and get better grades than students who miss class or are inattentive.
Academic Skills Center and Disability Statement
The ASC, located on the third floor of the Seeley Mudd Building of the Library, supports student
success at Albion College through the Learning Support Center, the Quantitative Skills Center,
and the Writing Center. The ASC also coordinates academic peer tutoring services and
educational technologies for enhancing student learning. For information, visit the ASC website
at http://www.albion.edu/asc.
If you have a disability and may require accommodations or modifications in class instruction or
course-related activities, please contact the Learning Support Center (LSC) staff who can arrange
for reasonable accommodations for students who provide documentation of their
disability/condition. If you are presently registered with the LSC and have requested
accommodations through the LSC for this semester, please plan to meet with me as early as
possible to discuss the best way to implement these accommodations in this class. The LSC’s
phone number is (517) 629-0825.
The Quantitative Skills Center provides a wide range of support to students in many subject
areas. Students are free to drop in for occasional help from trained student tutors or to make
appointments for on-going tutorial sessions. QSC staff members are available to assist you with
the use of mathematics, statistics, spreadsheets, or interpretation of graphs in any course.
The Writing Center provides trained peer consultants prepared to work with writers at every
stage of the writing process--from getting started brainstorming to writing drafts, and from
organizing ideas to revising or final editing. Writing consultants support students by responding
to writing in process, not by proofreading, editing, or writing students' papers. Both drop-in
tutoring and scheduled appointments are available during the Writing Center's afternoon and
evening hours.
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Tentative Class Schedule
Textbook
Readings
Week
Topics to be Covered
1
Aug 28
 Introduction
 Overview of Labor Market
 Demand for Labor
 Labor Demand Elasticities
 Labor Demand Elasticities (continued)
 Labor Supply
 Frictions in the Labor Market, Search
2
Sep 4
3
Sep 11
4
Sep 18
Chap. 1
Chap. 2
Chap. 3
Chap. 4
Chap. 4
Chap. 6
Chap. 5
FIRST TEST: THURSDAY SEPT. 20 (covers
5
Sep 25
6
Oct 2
7
Oct 9
8
Oct 16
9
Oct 23
chs. 1-4, 6)
 Household Production (brief)
 Compensating Differentials
 Human Capital & Signaling
Readings:
Orley Ashenfelter, “How Convincing is the Evidence Linking
Education and Income?” Working paper #292, Industrial
Relations Section, Princeton University, November 1991.
Claudia Goldin and Lawrence F. Katz, “The Future of
Inequality,” The Milken Institute Review, Third Quarter 2009,
pp. 26-33.
 Migration, Immigration, and Worker Turnover
Readings:
George J. Borjas, “Increasing the Supply of Labor Through
Immigration: Measuring the Impact on Native-born
Workers,” Center for Immigration Studies, May 2004.
George J. Borjas, “The Case for Choosing More Skilled
Immigrants,” The American Enterprise, December 2000, pp.
30-31.
Rank-ordered list of preferences for debate (both topic and
which side you want to present) due in class Tuesday, Oct. 9.
 Worker Compensation and Productivity
 Eyes on the Prize: Videos on US race relations, Thursday,
October 18
No classes Tuesday, October 23 (fall break)
SECOND TEST: THURSDAY, OCT. 25 (covers
text chs. 5, 7-11, plus course web readings)
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Chap. 7
Chap. 8
Chap. 9
Chap. 10
Chap. 11
10
Oct 30
11
Nov 6
12
Nov 13
13
Nov 20
 Race, Gender, and Ethnicity in the Labor Market
Readings:
Reynolds Farley, “Civil Rights and the Status of Black Americans
in the 1960’s and the 1990’s,” in C. Michael Henry (ed.),
Race, Poverty, and Domestic Policy (New Haven, CT: Yale
University Press, 2004), pp. 270-309.
William J. Wilson, More Than Just Race: Being Black and Poor
in the Inner City (New York: W.W. Norton and Co., 2009),
ch. 1, “Structural and Cultural Forces That Contribute to
Racial Inequality.” Available July 24, 2012, at:
http://books.google.com/books?id=ngvrlY1rjToC&printsec=f
rontcover&cd=1&source=gbs_ViewAPI#v=onepage&q&f=f
alse
Cass R. Sunstein, “Why Markets Don’t Stop Discrimination,” in
Cass R. Sunstein, Free Markets and Social Justice (Oxford
University Press, 1997), pp. 151-166.
Charles Murray, “Poverty and Marriage, Income Inequality and
Brains,” Pathways, Winter 2008, pp. 21-24.
C. Michael Henry, “Introduction: Historical Overview of Race
and Poverty from Reconstruction to 1969,” in C. Michael
Henry (ed.), Race, Poverty, and Domestic Policy (New
Haven, CT: Yale University Press, 2004), pp. 1-55.
 Race, Gender, and Ethnicity in the Labor Market (continued)
 Unions
 Unemployment
 Inequality in Earnings
 Labor Market Effects of International Trade
Chap. 12
Chap. 13
Chap. 14
Chap. 15
Chap. 16
No classes Thursday, November 22 (Thanksgiving)
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Nov 27
THIRD TEST: TUESDAY, NOV. 27 (covers text
15
Dec 4
DEBATE PAPERS DUE TUESDAY, DEC. 4
chs. 12-16, plus course web readings)
 Debates 1-4 (two debates per day)
Readings Required for Those Addressing Each Topic:
SKILL
Li FengLiang, Ding Xiaohao, and John W. Morgan, “Higher
Education and the Starting Wages of Graduates in China,”
International Journal of Educational Development, Vol. 29,
No. 4, July 2009, pp. 374-381.
Pedro Nuno Teixeira, “A Portrait of the Economics of Education,
1960-1997,” History of Political Economy, Vol. 32, No. 4,
Supplement, December 2000, pp. 257-287.
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None
Readings Required for Those Addressing Each Topic (continued):
LABOR UNIONS
Bruce E. Kaufman, “What Do Unions Do?—Evaluation and
Commentary,” Journal of Labor Research, Vol. 26, No. 4,
Fall 2005, pp. 555-595.
Richard B. Freeman, “What Do Unions Do?—The 2004 M-Brane
Stringtwister Edition,” Journal of Labor Research, Vol. 26,
No. 4, Fall 2005, pp. 641-668.
Kenneth McLennan, “What Do Unions Do?—A Management
Perspective,” Journal of Labor Research, Vol. 26, No. 4, Fall
2005, pp. 597-621.
IMMIGRATION
S. Longhi, P. Nijkamp, and J. Poot, “Joint Impacts of Immigration
on Wages and Employment: Review and Meta-Analysis,”
Journal of Geographical Systems, Vol. 12, No. 4, December
2010, pp. 355-387.
Kathleen C. Schwartzman, “Lettuce, Segmented Labor Markets,
and the Immigration Discourse,” Journal of Black Studies,
Vol. 39, No. 1, September 2008, pp. 129-156.
RACISM
See readings for weeks 9 and 10.
MINIMUM WAGES
George J. Stigler, “The Economics of Minimum Wage
Legislation,” American Economic Review. Vol. 36, No. 3,
June 1946, pp. 358-365.
David Neumark and William Wascher, “Minimum Wages and
Employment: A Case Study of the Fast-Food Industry in
New Jersey and Pennsylvania: Comment,” American
Economic Review. Vol. 90, No. 5, December 2000, pp. 13621396.
David Card and Alan Krueger, “Minimum Wages and
Employment: A Case Study of the Fast-Food Industry in
New Jersey and Pennsylvania: Reply,” American Economic
Review. Vol. 90, No. 5, December 2000, pp. 1397-1420.
Final
exam
week
There will be no exam during final exam week for this course.
The third test on November 27 is the last exam for E&M 354.
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