University Paris 1 Panthéon-Sorbonne
Paris School of Economics
Master 2 ETE, Empirical and Theoretical Economics
Labour & Household Economics
2013-2014 1st semester
François Langot,
Office : MSE room 322,
flangot@univ-lemans.fr
David Margolis
Office: MSE room 408
David.N.Margolis@gmail.com
Elena Stancanelli
Office: MSE room 421
elena.stancanelli@univ-paris1.fr
Web site for the course:
http://perso.univ-lemans.fr/~flangot/mapage_teach.html (Langot)
http://epi.univ-paris1.fr/ (Margolis and Stancanelli)
Description
This course is divided into three parts: macroeconomic models and labor supply,
microeconomic models and labor demand, and household economics.
Macro/Labor Supply
The part of the course is devoted to presentations of various models of the labor market. In a
first part, intertemporal walrasian models are solved and used to explain the long run trends of
the main labor market aggregates (hours worked per employee, employment, retirement,
education...). In a second part, search and matching frictions are introduced in order to explain
unemployment and wage inequalities. The course deals with the resolution of macro &
micro problems. Students are engaged to solve these models using numerical methods,
allowing them to evaluate policy using structural models.
Contents
1.
2.
3.
4.
Employment and hours per workers: a walrasian approach
Retirement and education: a walrasian approach
Search and wage dispersion
Matching and wage: the policy evaluation using structural models
Grading plan
Report and oral presentation of a personal solving of a model
References
Cahuc P. and Zylberberg A. (2004) : Labor Economics, MIT Press.
Ljungqvist L. and Sargent T. A. (2012) : Recursive Macroeconomic Theory, 3d ed., MIT Press.
Mortensen, D. (2003) Wage Dispersion: Why Are Similar Workers Paid Differently? MIT Press.
Pissarides C. (2010) Equilibrium unemployment Theory, 2nd Ed, MIT Press.
Micro/Labor Demand
This part of the course begins with the frictionless, perfectly competitive neoclassical labor
demand model and explores the implications of weakening the main assumptions of the model
for employment and earnings. Theoretical models are presented for each issue addressed, and
then empirical counterparts are discussed to show the relevance of the various models. The
tradeoffs associated with simplifying assumptions and the role of institutional context
(especially developed versus developing country differences) in determining outcomes are
recurrent themes.
Contents
1. Labor demand
a. Static labor demand and production theory
b. Dynamic labor demand and adjustment costs
2. Deviations from the competitive model
a. Minimum wages
b. “Employment” (wage) subsidies
3. Wage determination
a. Empirical decomposition of wages
b. Efficiency wages
c. Collective bargaining
Grading plan
Students are given a selection of articles from which they must choose and prepare a referee
report, summarizing the article, critiquing its weaknesses and proposing solutions.
References
Abowd, John M. and Francis Kramarz (2003). "The costs of hiring and separations," Labour
Economics, vol. 10, no. 5, pp. 499-530.
Abowd, John M, Francis Kramarz and David N. Margolis (1999). "High Wage Workers and High
Wage Firms" Econometrica, vol. 67, no. 2, pp. 251-333.
Card, David and Alan B. Krueger (1994). "Minimum Wages and Employment: A Case Study of
the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, vol. 84, no. 4,
pp. 772-793.
Card, David, Jochen Kluve and Andrea Weber (2010). "Active Labour Market Policy Evaluations:
A Meta-Analysis" Economic Journal, vol. 120, no. 548, pp. F452-F477.
Cramton, Peter C. and Joseph S. Tracy (1992). "Strikes and Holdouts in Wage Bargaining: Theory
and Data," American Economic Review, vol. 82, no. 1, pp. 100-121.
Crépon, Bruno and Rozenn Desplatz (2003). "The Effects of Payroll Tax Subsidies for Low Wage
Workers on Firms Level Decisions," CREST Working Papers, no. 2003-06.
Del Carpio, Ximena, David N. Margolis and Yuko Okamura (2013). “A micro-simulation-based
estimation of the effects of minimum wage changes in the Philippines,” mimeo.
Doucouliagos, Hristos and T. D. Stanley (2009). "Publication Selection Bias in Minimum-Wage
Research? A Meta-Regression Analysis," British Journal of Industrial Relations, vol. 47, no. 2, pp.
406-428.
Hamermesh, Daniel S. (1993), Labor Demand (Princeton, NJ : Princeton University Press).
Hosken, Daniel S. and David N. Margolis (1997). "The Efficiency of Collective Bargaining in
Public Schools," CREST Working Paper, no. 9755.
Manning, Alan (1987). "An Integration of Trade Union Models in a Sequential Bargaining
Framework," Economic Journal, vol. 97, no. 385, pp. 121-139.
McConnell, Sheena (1989). "Strikes, Wages, and Private Information," American Economic
Review, vol. 79, no. 4, pp. 801-815.
Household economics
This part of the course expands on conventional labour supply models by taking into account
the interactions of the economic decisions of household members as well as incorporating
house work into the picture. The theoretical foundations of household economics are
explained and recent empirical evidence that supports or confounds the theory is presented. At
the end of the course, students are expected to be able to master this topic.
Contents
1.
2.
3.
4.
Household decision making
Household time allocation
Spouses’ labor supply
Children outcomes
Grading plan
The evaluation for this part of the course consists of being able to understand and comment a
published paper in this field, and it takes the form of a written exam of three hours at the end
of the course.
References
Apps, Patricia and Ray Rees, 2009, Public Economics and the Household.
Becker, G. S. (1965) “A Theory of the Allocation of Time,” The Economic Journal.
Bobonis, Gustavo J. (2008) “Is the Allocation of Resources within the Household Efficient? New
Evidence from a Randomized Experiment,” Journal of Political Economy.
Browning, Martin, Pierre-André Chiappori, and Yoram Weiss (2011) Family Economics.
Gronau, Reuben (1987). "Home production -- A survey," in O. Ashenfelter & R. Layard (ed.)
Handbook of Labor Economics.
Juster, F. Thomas and Frank P. Stafford, (1991). "The Allocation of Time: Empirical Findings,
Behavioral Models, and Problems of Measurement,"Journal of Economic Literature.
Klevmarken, N. Anders and Frank P. Stafford (1997). "Time Diary Measures of Investment in
Young Children," Uppsala University Working Paper Series.
Lundberg, Shelly and Robert A. Pollak (2008), “Family Decision-Making,” in Larry Blume and
Steven Durlauf (eds) The New Palgrave, Dictionary of Economics, 2nd Edition (Palgrave Macmillan).
Nava, Ashraf (2009) “Spousal Control and Intra-Household Decision Making: An Experimental
Study in the Philippines,” American Economic Review.
Pollak, Robert A. (2003), “Gary Becker's Contributions to Family and Household Economics,”
Review of Economics of the Household.