Advanced Topics in Labor Economics CRN ECON A01 Pascal Courty University of Victoria

Transcription

1 Advanced Topics in Labor Economics CRN ECON A01 Pascal Courty University of Victoria September-December 2009 Monday-Thursday: 11:30-12:50 in BEC 363 Office hours: Wednesday 13:30 14:30 or by appointment Webpage: Course Description: This course covers modern topics in labor economics such as moral hazard, adverse selection, matching, and intrinsic motivation, to name just a few examples. We present applications of mainstream micro models and investigate the empirical relevance of these applications. An important emphasis will be given to research method. In each session, we investigate how micro-theory has been applied to address specific labor issues, review the predictions of the theory, and assess how these predictions have been tested. Course Objectives: This course has two main objectives. First, I will cover some recent developments in labor economics such as personnel economics, performance incentives, and pro-social behavior. Second, this course teaches new researchers how to write a paper by following an incremental three-step approach. Researchers initially read research papers and assess each paper s contribution. Toward the middle of the course, researchers will write, present, and defend a research proposal. At the end of the term, researchers will hand out a preliminary research paper. Evaluation: You are expected to (a) hand in a referee report for 2 assigned papers (30 percent of final grade), (b) write a short essay proposal (30 percent of final grade), and (c) write a term paper (40 percent of final grade). (See below for more details on these assignments.) These assessments will be graded on a percentage scale, weighted as above into a numerical score that will be converted to a letter grade as follows: % = A % = A 80-84% = A % = B % = B 65-69% = B % = C % = C 50-54% = D 0-49% = F (No E grades will be assigned.) Plagiarism and Cheating: Students are expected to observe the same standards of scholarly integrity as their academic and professional counterparts. Students who are found to have engaged in unethical academic behaviour, including the practices described on pages 32 and 33 of the University Calendar, are subject to penalty by the University. Inclusivity and Diversity: The University of Victoria is committed to promoting, providing and protecting a positive, supportive and safe learning and working environment for all its members. (University Calendar, p. 10.)

2 Textbooks and reading material Acemoglu, Daron. Lecture notes for graduate labor economics. Angrist, Joshua and Jörn-Steffen Pischke (2008). Mostly Harmless Econometrics: An Empiricist's Companion. Princeton University Press. Botlon and Dewatripont (2004). Contract Theory.The MIT Press. Mas Colell, Whinston, Green (1995) Microeconomic Theory Oxford University Press (Chapter 13-14). Salanie, B. (1997). The Economics of Contracts: A Primer, MIT Press. Wooldridge, Jeffrey M. (2001) Econometric Analysis of Cross Section and Panel Data. MIT Press. (*) Assigned readings (articles covered in class). 0-Course Introduction (*) Prendergast, Canice. (1999) The Provision of Incentives in Firms, Journal of Economic Literature (*) Chiappori, Pierre-Andre and Bernard Salanie. (2003). Testing Contract Theory: a Survey of Some Recent Work. In Advances in Economics and Econometrics - Theory and Applications, Eighth World Congress, M. Dewatripont, L. Hansen and P. Turnovsky, ed., Econometric Society Monographs, Cambridge University Press, Cambridge Moral Hazard Holmstrom B. (1979). Moral Hazard and Observability, Bell Journal of Economics. 10: Holmstrom, B. (1982) Moral Hazard in Teams, Bell Journal of Economics, 13: (*) Gaynor, Martin, and Paul Gertler. (1995). Moral Hazard and Risk Spreading in Partnerships. The RAND Journal of Economics. 4: Prendergast, Canice. (1999). The Provision of Incentives in Firms. Journal of Economic Literature (*) Chiappori, Pierre-Andre and Bernard Salanie. Testing for Asymmetric Information in Insurance Markets. Journal of Political Economy. 108, 1, 2000, Selection and Identification Akerlof G. (1970) The Market for Lemon, QJE 89: Rothchild and Stiglitz, (1976). Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect information. Quarterly Journal of Economics Stiglitz, Joseph E. (2000). The Contribution of the Economics of Information to Twentieth Century Economics. Quarterly Journal of Economics. pp

3 (*) Chiappori, Pierre-Andre, Bruno Jullien, Bernard Salanie, and Francois Salanie. (2007). Asymmetric Information in Insurance: General Testable Implications. Rand Journal of Economics. (*) Karlan, Dean and Jonathan Zinman. (2008). Observing Unobservables: Identifying Information Asymmetries with a Consumer Credit Field Experiment. Econometrica. 3-Multi-tasking, Performance Measurement, and Personnel Economics Baker, George P. (1992). Incentive Measures and Performance Measurement. Journal of Political Economy Holmstrom, B., and P. Milgrom. (1991). Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design. Journal of Law, Economics, and Organization. 57: Courty, Pascal and Gerald Marschke. (2004). An Empirical Investigation of Gaming Responses to Explicit Performance Incentives. Journal of Labor Economics (*) Courty, Pascal and Gerald Marschke. (2008). A General Test of Distortion. The Review of Economics and Statistics Jacob, Brian and Steven Levitt. (2002). Rotten Apples: An Investigation of the Prevalence and Predictors of Teacher Cheating. Quarterly Journal of Economics. 4-Contracts and Matching (*) Courty, Pascal and Gerald Marschke. On the Sorting of Physicians across Medical Specialties: Understanding Shortages and Growth in Specialization. Mimeo, European University Institute. Holmstrom, Bengt & Milgrom, Paul. (1994). The Firm as an Incentive System. American Economic Review. 84, Serfes, Konstantinos. (2005). Risk sharing vs. incentives: Contract design under two-sided heterogeneity. Economics Letters, 88, (*) Ackerberg, D. and M. Botticini. (2002). Endogenous Matching and the Empirical Determinants of Contract Form. Journal of Political Economy. 110: McKinney, C. Nicholas, Niederle, Muriel and Alvin E. Roth. (2005). The collapse of a medical labor clearinghouse (and why such failures are rare). American Economic Review (*) Compton, Janice and Robert A. Pollak. (2007). Why Are Power Couples Increasingly Concentrated in Large Metropolitan Areas? Journal of Labor Economics, University (*) Courty, Pascal and Mario Pagliero. (2009). Frictional Matching: Evidence from Law School Admission. EUI working paper. 5-Worker Motivation: Intrinsic Motivation and Pro-Social Behavior

4 Besley T. and M. Ghatak (2005). Competition and Incentives with Motivated Agents. The American Economic Review. 95, Dur, Robert and Josse Delfgaauw. (2008). Incentives and Workers' Motivation in the Public Sector. Economic Journal Dur, Robert and Josse Delfgaauw. (2007). Signaling and Screening of Workers' Motivation. Journal of Economic Behavior and Organization Prendergast. Canice. (2009). Contracts and Conflict in Organizations. Mimeo, University of Chicago. (*) Falk, A., and M. Kosfeld. (2006). The Hidden Costs of Control. American Economic Review Gneezy, U., and A. Rustichini. (2000). Pay enough or don't pay at all. Quarterly Journal of Economics (*) Bandiera, Oriana, Iwan Barankay, and Imran Rasul. (2005). Social Preferences and the Response to Incentives: Evidence from Personnel Data. Quarterly Journal of Economics Scientist Incentives Rosen, Sherwin. (1972). Learning and experience in the labor market. Journal of Human Resources Pakes, Ariel and S. Nitzan. (1983). Optimum contracts for research personnel, research employment, and the establishment of rival enterprises. Journal of Labor Economics (*) Moen, Jarle. (2005). Is mobility of technical personnel a source of R&D spillovers?. Journal of Labor Economics (*) Stern, Scott. (2004). Do scientists pay to be scientists?. Management Science Marschke, Gerald and J. Kim. (2005). Labor Mobility of Scientists, Technological Diffusion, and the Firm s Patenting Decision. The Rand Journal of Economics

5 Assignments for the course One objective of this course is to teach you how to write a research paper in applied micro economics. To achieve this goal, we will follow a three-step incremental approach with three different types of assignments. You will first learn how to critically read and assess the work of others. You will then write a research proposal. Finally, you will take some steps toward making a scientific contribution that will take the format of a research paper. (a) Referee Reports You should write referee reports of no more than 800 words. We will discuss the articles and your reports in a review session. For the article you have been assigned, you should summarize its main contributions, show how it relates to the literature covered in class, discuss the article s main limitations and identify possible alleys of research along the line of the article. Most importantly, you should try provide an assessment of the importance of the article s contribution to the literature. In particular, I would like you to explain how the article proposes to bring theory (broadly defined concepts or specific model) to the data. Explain (a) What hypothesis the article tests? (b) What is the empirical strategy? (c) What are the strength and weaknesses of the data used to test the theory? (d) Are there alternative models/hypothesis that could explain the evidence? (b) Proposal In your essay, you could propose to either (1) test one of the theories (broadly defined) we covered in class (2) construct a simple applied model using the theories covered in class to explain a phenomenon or stylized fact of interest. In both cases, your essay should (a) introduce the topic your are investigating (b) review the theory(ies) that are related to your topic. If you choose (1) you should then (c) articulate a testable hypothesis (d) describe data and evidence that should be collected to test your hypothesis (e) present preliminary evidence and discuss what you can infer from this evidence. If you choose (2) you should (c) present a very simple model that could explain your puzzle, (d) derive the implications of a strip-down version of the model, (e) discuss how these conclusions could generalize. (c) Term paper Your course paper should ideally be the starting point for a research paper. It will normally be an extended version of your proposal where you take significant steps toward narrowing down your question, providing insightful answers, and demonstrating the importance of your contribution. For your proposal and your term paper, you are free to choose any topic you want as long as you can demonstrate that it is related to labor economics. You will come up with ideas for topics as you become exposed with the course material and as you read research papers for the course. I myself continuously think of potential topics. The following topics are meant to suggest ideas that are related to the course and that could constitute the starting point for a research project. I can talk more about these ideas with those of you who are interested.

6 Document how performance assessment for undergraduate courses varies across academic disciplines and try to explain these differences. Document variations in labor contracts for faculty university personnel across academic fields. Review the codebook of the Workplace and Employee Survey and identify issues in incentives and labor economics. Using the Workplace and Employee Survey, explain whether pro-social attitudes help explain the type of incentive schemes used in firms. Investigate whether social and demographic characteristics of entrepreneurs (gender, political preferences ) help explain the type of incentive schemes used in firms. Explain how specialist physicians sort across markets of different sizes. To what extent larger markets attract a disproportional fraction of specialists? Document the extent to which top universities have been recruiting over time high school graduates from a narrower subset of selective high schools? Is the chance to attend a top university determined earlier in one s life?