Economics 8885: Graduate (Macro) Labor
Instructor: Tzuo Hann Law
Office: Maloney 333
Email: tzuohann@gmail.com
Office Hours: M, 1430-1630
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Course Outline
Broadly speaking, I will focus on the intersection on macroeconomics and labor economics.
In the first half, we will survey available datasets and discuss labor demand and equilibrium
unemployment in the labor market. We follow Labor Economics, 2nd Ed closely.
We will spend the second half on labor market sorting, intersection of macro-finance-labor
and student presentations. Presentations will be on pairs of papers. The papers should have
different findings or methods to resolve the same issue, or use different method’s to answer
the same question.
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Requirements
1. Participation 20%
2. Presentation 30%
3. Assignment 50%
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Suggested Reading
3.1
Data and Broad Questions
1. Eckstein and van den Berg (2007)
2. Abowd and Kramarz (1999)
3. Katz and Autor (1999)
4. Katz and Murphy (1992)
5. Abowd et al. (2009)
6. Angrist and Krueger (1999)
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3.2
Labor Demand and Equilibrium Unemployment
1. Cahuc et al. (2014)
2. Mortensen (1986)
3. Davis and Haltiwanger (1992)
4. Mitman and Rabinovich (2014)
5. Mitman and Rabinovich (2015)
6. Jaimovich and Siu (2012)
7. Rogerson and Shimer (2011)
8. Rogerson et al. (2005)
9. Burdett and Mortensen (1998)
3.3
Labor Market Sorting
1. Heckman and Honor (1990)
2. Hagedorn et al. (2012)
3. Law and Kantenga (2014)
4. Herkenhoff et al. (2015)
5. Lopes de Melo (2008)
6. Barth et al. (2014)
7. Lise et al. (2012)
8. Kaas and Kircher (2011)
9. Becker (1973)
10. Lindenlaub (2014)
11. Gautier and Teulings (2012)
12. Shimer and Smith (2000)
13. Abowd et al. (1999)
14. Card et al. (2013)
15. Eeckhout and Kircher (2012)
16. Eeckhout and Kircher (2011)
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3.4
Macro-Finance-Labor
1. Almazan et al. (2012)
2. Baker et al. (1994)
3. Benmelech et al. (2012)
4. Berk et al. (2010)
5. Brown and Matsa (2013)
6. Brown and Medoff (2003)
7. Hennessy and Whited (2005)
8. Jermann and Quadrini (2012)
9. Menzio and Shi (2010)
10. Michelacci and Quadrini (2009)
11. Zhang (2014)
12. Buera and Moll (2012)
13. Buera et al. (2014)
14. Pistaferri et al. (2010)
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References
Abowd, J. M. and F. Kramarz (1999). Chapter 40 The analysis of labor markets using
matched employer-employee data. Volume 3, Part 2 of Handbook of Labor Economics, pp.
2629 – 2710. Elsevier.
Abowd, J. M., F. Kramarz, and D. N. Margolis (1999, March). High Wage Workers and High
Wage Firms. Econometrica 67 (2), 251–334.
Abowd, J. M., B. E. Stephens, L. Vilhuber, F. Andersson, K. L. McKinney, M. Roemer, and
S. Woodcock (2009). The LEHD Infrastructure Files and the Creation of the Quarterly
Workforce Indicators. NBER Chapters, National Bureau of Economic Research, Inc.
Almazan, A., D. Motta, Adolfo, and S. Titman (2012, February). Debt, Labor Markets and
the Creation and Destruction of Firms. SSRN Scholarly Paper ID 2021162, Social Science
Research Network, Rochester, NY.
Angrist, J. D. and A. B. Krueger (1999). Chapter 23 - Empirical Strategies in Labor Economics. In O. C. A. a. D. Card (Ed.), Handbook of Labor Economics, Volume 3, Part A,
pp. 1277–1366. Elsevier.
Baker, G., M. Gibbs, and B. Holmstrom (1994, November). The Wage Policy of a Firm. The
Quarterly Journal of Economics 109 (4), 921–955.
Barth, E., A. Bryson, J. C. Davis, and R. Freeman (2014). It’s Where You Work: Increases
in Earnings Dispersion across Establishments and Individuals in the U.S. NBER Working
Paper 20447, National Bureau of Economic Research, Inc.
Becker, G. S. (1973). A Theory of Marriage: Part I. Journal of Political Economy 81 (4), pp.
813–846.
Benmelech, E., N. K. Bergman, and R. J. Enriquez (2012, September). Negotiating with
Labor under Financial Distress. Review of Corporate Finance Studies 1 (1), 28–67.
Berk, J. B., R. Stanton, and J. Zechner (2010, June). Human Capital, Bankruptcy, and
Capital Structure. The Journal of Finance 65 (3), 891–926.
Brown, C. and J. L. Medoff (2003, July). Firm Age and Wages. Journal of Labor Economics 21 (3), 677–698.
Brown, J. and D. A. Matsa (2013, January). Boarding a Sinking Ship? An Investigation of
Job Applications to Distressed Firms. SSRN Scholarly Paper ID 2024455, Social Science
Research Network, Rochester, NY.
Buera, F. J., R. Fattal-Jaef, and Y. Shin (2014, March). Anatomy of a Credit Crunch: From
Capital to Labor Markets. Working Paper 19997, National Bureau of Economic Research.
Buera, F. J. and B. Moll (2012, January). Aggregate Implications of a Credit Crunch.
Working Paper 17775, National Bureau of Economic Research.
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Burdett, K. and D. T. Mortensen (1998). Wage Differentials, Employer Size, and Unemployment. International Economic Review 39 (2), pp. 257–273.
Cahuc, P., S. Carcillo, A. Zylberberg, and W. McCuaig (2014). Labor economics. MIT press.
Card, D., J. Heining, and P. Kline (2013). Workplace Heterogeneity and the Rise of West
German Wage Inequality*. The Quarterly Journal of Economics 128 (3), 967–1015.
Davis, S. J. and J. Haltiwanger (1992, August). Gross Job Creation, Gross Job Destruction,
and Employment Reallocation. The Quarterly Journal of Economics 107 (3), 819–863.
Eckstein, Z. and G. J. van den Berg (2007, February). Empirical labor search: A survey.
Journal of Econometrics 136 (2), 531–564.
Eeckhout, J. and P. Kircher (2011). Identifying Sorting - In Theory. The Review of Economic
Studies 78 (3), 872–906.
Eeckhout, J. and P. Kircher (2012, February). Assortative Matching with Large Firms: Span
of Control over More versus Better Workers. Technical report.
Gautier, P. and C. Teulings (2012, March). Sorting and the output loss due to search frictions.
CPB Discussion Paper 206, CPB Netherlands Bureau for Economic Policy Analysis.
Hagedorn, M., T. H. Law, and I. Manovskii (2012, December). Identifying Equilibrium Models
of Labor Market Sorting. NBER Working Papers 18661, National Bureau of Economic
Research, Inc.
Heckman, J. J. and B. E. Honor (1990, September). The Empirical Content of the Roy
Model. Econometrica 58 (5), 1121–1149.
Hennessy, C. A. and T. M. Whited (2005, June). Debt Dynamics. The Journal of Finance 60 (3), 1129–1165.
Herkenhoff, K., G. Phillips, and E. Cohen-Cole (2015). How Credit Constraints Impact Job
Finding Rates, Sorting & Aggregate Output.
Jaimovich, N. and H. E. Siu (2012, August). The Trend is the Cycle: Job Polarization and
Jobless Recoveries. Working Paper 18334, National Bureau of Economic Research.
Jermann, U. and V. Quadrini (2012). Macroeconomic Effects of Financial Shocks. American
Economic Review 102 (1), 238–71.
Kaas, L. and P. Kircher (2011, January). Efficient Firm Dynamics in a Frictional Labor
Market. IZA Discussion Papers 5452, Institute for the Study of Labor (IZA).
Katz, L. F. and D. H. Autor (1999). Changes in the wage structure and earnings inequality. In
O. Ashenfelter and D. Card (Eds.), Handbook of Labor Economics, Volume 3 of Handbook
of Labor Economics, pp. 1463–1555. Elsevier.
Katz, L. F. and K. M. Murphy (1992, February). Changes in Relative Wages, 1963-1987:
Supply and Demand Factors. The Quarterly Journal of Economics 107 (1), 35–78.
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Law, T. H. and K. Kantenga (2014). Sorting and Wage Inequality.
Lindenlaub, I. (2014). Sorting Multidimensional Types: Theory and Application. 2014
Meeting Paper 979, Society for Economic Dynamics.
Lise, J., C. Meghir, and J.-M. Robin (2012). Matching. sorting and wages.
Lopes de Melo, R. (2008, December). Sorting in the Labor Market: Theory and Measurement.
Menzio, G. and S. Shi (2010, July). Block recursive equilibria for stochastic models of search
on the job. Journal of Economic Theory 145 (4), 1453–1494.
Michelacci, C. and V. Quadrini (2009, April). Financial Markets and Wages. The Review of
Economic Studies 76 (2), 795–827.
Mitman, K. and S. Rabinovich (2014). Do Unemployment Benefit Extensions Explain the
Emergence of Jobless Recoveries?
Mitman, K. and S. Rabinovich (2015, April). Optimal unemployment insurance in an equilibrium business-cycle model. Journal of Monetary Economics 71, 99–118.
Mortensen, D. T. (1986). Chapter 15 Job search and labor market analysis. Volume 2, pp.
849–919. Elsevier.
Pistaferri, L., L. Guiso, and F. Schivardi (2010, April). Credit within the firm. Working
Paper 15924, National Bureau of Economic Research.
Rogerson, R. and R. Shimer (2011). Chapter 7 - Search in Macroeconomic Models of the
Labor Market. In O. A. a. D. Card (Ed.), Handbook of Labor Economics, Volume 4, Part
A, pp. 619–700. Elsevier.
Rogerson, R., R. Shimer, and R. Wright (2005, December). Search-Theoretic Models of the
Labor Market: A Survey. Journal of Economic Literature 43 (4), 959–988.
Shimer, R. and L. Smith (2000, March). Assortative Matching and Search. Econometrica 68 (2), 343–370.
Zhang, M. X. (2014, October). Who Bears Firm-Level Risk? Implications for Cash Flow
Volatility. SSRN Scholarly Paper ID 2357050, Social Science Research Network, Rochester,
NY.
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