Labour Economics
Profs. Ghazala Azmat and Julián Messina
Course objectives
In this course, we try to give you an overview of some important topics in the field of
labor economics, with a strong emphasis on theoretically motivated empirics or data
driven theory. We tried to select topics that are at the edge of current research interests,
so that you can start thinking about your own research topics. The aim is not only
introduce you to the field, but also to prepare you to do your own research.
Grading
The course will be graded based on a final exam plus several problem sets that will be
assigned along the quarter (between two and four). The final homework will involve
your presentation of an original research idea.
Contacts
Ghazala, room 20.1E74, ghazala.azmat@upf.edu,
www.econ.upf.edu/~azmat/
Julián, room 20.1E42, julian.messina@udg.edu,
www3.udg.edu/fcee/professors/jmessina/
This syllabus and other relevant information will be posted on our websites.
Preliminary Reading List
Part I: Human Capital and Labor Supply (Ghazala Azmat)
1. Stylised Facts: Education and the Labour Market (Lectures 1, 2)
“Education at a Glance”, OECD 2007
“Statistical Yearbook” and “World Education Report”, UNESCO
2. Human Capital Models & Empirical Estimation of the Earnings Function
(Lectures 3, 4)
Becker, G.S (1975) “Human Capital” (2nd Edition). N.Y. NBER.
Mincer, J. (1974) “Schooling , Experience and Earnings”. New York. Columbia
Univeristy Press.
Card, D. (1999), “The Causal Effect of Education on Earnings,” in O. Ashenfelter & D.
Card (ed.) Handbook of Labor Economics, vol. 3, 1801-1863, Elsevier
Card, D. (2001), “Estimating the Return to Schooling: Progress on Some Persistent
Econometric Problems,” Econometrica, 69, 1127-60
Angrist, J. D., & Krueger, A. B. (1991) “Does Compulsory School Attendance affect
Schooling and Earnings?” Quarterly Journal of Economics (106)
Ashenfelter, O. C & Krueger, A. B (1994) “Estimates of the Economic Return to
Schooling from a New Sample of Twins”, American Economic Review (Dec, pp. 11571173)
3. Returns to School Quality (Lectures 5, 6)
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Card, D. & Krueger, A. B. (1992) “Does School Quality Matter? Returns to Education
and the characteristics of Public Schools in the United States”, Journal of Political
Economy (Feb. Vol. 100, pp. 1-40)
Krueger, A.B. (1999) “Experimental Estimates of Education Production Functions”,
Quarterly Journal of Economics, 114, 497-532.
Krueger, A.B., and D.M. Whitmore (2001) “The Effect of Attending a Small Class in
the Early Grades on College-Test Taking and Middle School Test Results: Evidence
from Project Star”, The Economic Journal, Vol. 111, pp.1-28
Dale, S.B. and A.B. Krueger (2002), “Estimating the Payoff to Attending a More
Selective College: An Application of Selection on Observables and Unobservables,”
Quarterly Journal of Economics, 117, 1491-1527
Hanushek, E. A. (2003). "The Failure of Input-Based Schooling Policies." Economic
Journal (113, F64-F98).
Hanushek, E. A (1996) “Measuring Investment in Education”, Journal of Economic
Perspectives (Vol. 10 No. 4, pp. 9-30)
Dearden, L., Ferri, J., and Meghir, C. (2002). "The Effect of School Quality on
Educational Attainment and Wages." Review of Economics and Statistics (84, 1, 1-20)
Black, D.A. and J.A. Smith (2006), “Estimating the Returns to College Quality with
Multiple Proxies for Quality,” Journal of Labor Economics, 24
4. Screening and Signalling (Lectures 7, 8)
Altonji, J. (1995) “The Effects of High School Curriculum on Education and Labour
Market Outcomes”, Journal of Human Resources (Vol. 30, No. 3, pp. 409-438)
Bedard. K. (2001) 2Human Capital versus Signaling Models: University Access and
High School Dropouts” Journal of Political Economy (Vol. 109, No. 4, pp. 749-775)
Stiglitz, J. (1975) “The Theory of Screening, Education and the Distribution of
Income”, American Economic Review (June, pp. 283-300)
Weiss, A. (1995) “Human Capital vs. Signalling Explanation of Wages”, Journal of
Economic Perspectives (Vol. 9, No. 4, pp. 133-154)
5. Returns to Job Training (Lectures 9, 10)
Ashenfelter, O. C. (1978) “Estimating the Effect of Training Programs on Earnings”,
Review of Economics and Statistics (Vol. 67)
Heckman, J. J., Lalonde, R. J. and Smith, J.A (1999) “The Economics and
Econometrics of Active Labor Market Policies”, in Ashenfelter, O. and Card, D.
Handbook of Labor Economics, Vol. 3A
Dearden, L., H. Reed, and J. van Reenen (2006), “The Impact of Training on
Productivity and Wages: Evidence from British Panel Data,” Oxford Bulletin of
Economics & Statistics, 68, 397-421
Deheija, R. and S. Wahba (1999), “Causal Effects in Nonexperimental Studies:
Reevaluating the Evaluation of Training Programs,” Journal of the American Statistical
Association, 94, 1053-1062
LaLonde, R. (1986), “Evaluating the Econometric Evaluations of Training Programs
with Experimental Data,” American Economic Review, 76, 604-620
Smith, J.A. and P. Todd (2006), “Does Matching Overcome LaLonde’s Critique of
Nonexperimental Estimators?” Journal of Econometrics, 125, 305-353
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Part II: Labor Market Equilibrium (Julián Messina)
1. Earnings inequality (Lectures 11, 12)
Cahuc & Zylberberg (2004), Labor Economics, Chapter 10.2.
Ehrenberg & Smith (2008) Modern Labor Economics, Chapter 15.
Autor, D., L. Katz, and A. Krueger, “Computing Inequality: Have Computers Changed
the Labor Market?” QJE 1998.
Card, D. and J. DiNardo, “Skill biased technological change and rising wage inequality:
Some problems and puzzles” Journal of Labor Economics, vol. 20, 2002.
Dustmann, C. J. Ludsteck and U. Schoenberg, “Revisiting the German Wage
Structure”; forthcoming Quarterly Journal of Economics
Juhn, K. Murphy, and B. Pierce, "Wage Inequality and the Rise in Returns to Skill.,"
JPE 1993.
Katz, L and D. Autor, “Changes in the Wage Structure and Earnings Inequality,”
Handbook of Labor Economics, 1999.
2. Compensating Differentials (Lectures 13, 14)
Cahuc & Zylberberg (2004) Labor Economics, Chapter 5.
Ehrenberg & Smith (2008) Modern Labor Economics, Chapter 8.
Daniel, C. and C. Sofer "Bargaining, Compensating Wage Differentials and Dualism of
the Labor Market. Theory and Evidence for France." Journal of Labor Economics,
July,Vol.16, n°3, p.546-575
Rosen, S. (1986). “The Theory of Equalizing Differences” in the Handbook of Labor
Economics, vol. 1, pp 641-92.
Roback, J. (1982) “Wages, Rent and the Quality of Life”. Journal of Political Economy.
Vol. 90.6 (December) 1257-78.
3. Discrimination (Lecture 15,16)
Cahuc & Zylberberg (2004) Labor Economics, Chapter 5
Ehrenberg & Smith (2008) Modern Labor Economics, Chapter 12.
J. Altonji and R. Blank (1999) “Race and Gender in the Labor Market” in O.
Ashenfelter and D. Card, eds. Handbook of Labor Economics, vol. 3C North Holland,
3143-3259.
J. Altonji and C. R. Pierret (2001) “Employer Learning and Statistical Discrimination”
QJE 116(1): 313-350.
G. Becker, The Economics of Discrimination, 1971.
4. Efficiency Wages (Lectures 17, 18)
Cahuc & Zylberberg (2004) Labor Economics, Chapter 6 (sections 6.1, 6.4).
Ehrenberg & Smith (2008) Modern Labor Economics, Chapter 11.
Dickens, William T & Lang, Kevin, 1985. "A Test of Dual Labor Market Theory,"
American Economic Review, vol. 75(4), pages 792-805
Fehr, E., G. Kirchsteiger, and A. Riedl. "Does Fairness Prevent Market Clearing? An
Experimental Investigation." Quarterly Journal of Economics 108, no. 2 (1993): 437460. Econometrica 56, no. 2 (March 1988): 259-293.
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Gibbons, R., and L. Katz. "Does Unmeasured Ability Explain Inter-Industry Wage
Differentials?" Review of Economic Studies 59, no. 3 (July 1992): 515-535.
Katz, L. “Efficiency Wage Theories: A partial Evaluation” NBER Macro Annual 1986.
Shapiro, C., and J. Stiglitz. "Equilibrium Unemployment as a Worker Discipline
Device." American Economic Review 74, no. 3 (1984): 433-444.
Yellen, J. “Efficiency Wage Models of Unemployment” American Economic Review,
1984
5. Unions and Collective Bargaining (Lectures 19, 20)
Cahuc & Zylberberg (2004) Labor Economics, Chapter 7 (sections 7.1, 7.2, 7.3, 7.6).
Ehrenberg & Smith (2008) Modern Labor Economics, Chapter 13.
DiNardo, John, Fortin, Nicole M and Lemieux, Thomas, "Labor Market Institutions and
the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica,
vol. 64(5), pages 1001-44, September 1996
Kahn, L. "Wage Inequality, Collective Bargaining, And Relative Employment From
1985 To 1994: Evidence From Fifteen Oecd Countries," The Review of Economics and
Statistics, vol. 82(4), pages 564-579, November 2000’
McDonald and R. Solow “Wage Bargaining and Employment”, American Economic
Review, 1984
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