Labor Economics I Fall 2014

Transcription

1 Labor Economics I Fall 2014 Instructor: Christopher Flinn Room 809, 19 W. 4th Street christopher.flinn@nyu.edu Class Schedule: Wednesday 4-6, Room 624, 19 W. 4th Street Office Hours: By appointment (send me an or contact me after class). Course Objectives: The objective of the course is to acquaint students with modern topics, modeling strategies, econometric methods, and empirical work in the field of labor economics. We will cover topics in the analysis of labor market dynamics [(unemployed and on-the-job) search and informational models of turnover], alternative models of wage determination, compensating differentials, and household behavior and human capital investment, particularly in children and young adults. For each of the topics covered we will begin by presenting some of the relevant theoretical models that have been developed. We will then turn our attention to issues of model specification and estimation given the type of data typically available to labor economists. We intend to spend roughly equal amounts of time on theoretical and empirical issues. Prerequisites: One year of microeconomic theory and Econometrics II or its equivalent. Text: There is no required text, but my recent book (The Minimum Wage and Labor Market Outcomes, MIT Press, 2010) provides some background for continuous time search models and contains some applications that will be discussed extensively in class. A text that gives a very good overview of most of the topics we cover in the course (and many that we will not), although without much attention to econometric issues, is Labor Economics by P. Cahuc and A. Zylberberg, MIT Press, It is well-written and could serve as a useful overview of the field. Requirements and Grading: 1. There is a take-home final examination. Questions will be based on the required material on the reading list and lecture material. 2. During the semester I will hand out 4 or 5 problem sets that you are expected to complete and hand in. The possible grades will be good, satisfactory, and unsatisfactory. The problem sets will attempt to emphasize an equal amount of theory, econometrics, and empirics. 3. Each student is expected to present one of the papers on the reading list (or an approved paper not on it) during the semester. The presentation, including a critical discussion of the paper, should be approximately 30 minutes in length. 1

2 Readings: The items on the reading list marked with an asterisk (*) are required readings. You should be able to find almost everything on-line. If you have difficulties locating something, let me know. Topics: Lecture R.L. # Topic Labor Market Dynamics 1 1.A Course Introduction; Describing Labor Market Dynamics 2 1.B Unemployed Search Theory 3 1.C Econometrics of Unemployed Search 4 1.D Matching, Bargaining, and Search 5 1.E Equilibrium Search 6 1.F Equilibrium Search Applications 7 1.G Job Mobility 8 Job Mobility (continued) 9 1.H Compensating Differentials Household Economics 10 2.A Household Bargaining and Labor Supply 11 2.B Models of Household Formation and Dissolution 12 Household Formation and Dissolution (continued) 13 2.C Child Development 14 Child Development (continued) 2

3 Reading List Note: Selections with (*) are required 1.A. Describing Labor Market Dynamics 1. *Burdett, K. and D. Mortensen. Labor Supply under Uncertainty. In Research in Labor Economics, Vol. 2 (Ehrenberg, ed.). Greenwich:CN: JAI Press, *Flinn, C. Chapter 3 of Minimum Wages and Labor Market Outcomes. MIT Press, *Flinn, C. and J. Heckman. Are Unemployment and Out of the Labor Force Behaviorally Distinct Labor Force States? Journal of Labor Economics 1 (1983): Toikka, R. A Markovian Model of Labor Market Decisions by Workers. A.E.R. 66 (1976): Ross, S. Applied Probability Models with Optimization Applications. San Francisco: Holden- Day, Available as a Dover paperback. Highly recommended as background material. 1.B. Unemployed Search Theory 1. *Burdett and Mortensen (from 1.A), continued. 2. *Flinn (from 1.A), continued. 3. Rendon, S. Job Search and Asset Accumulation under Borrowing Constraints. International Economic Review 47 (2006): *Rothschild, M. Searching for the Lowest Price when the Distribution of Prices is Unknown. J. Pol. Econ. 82 (1974): *Salop, S. Systematic Job Search and Unemployment. Rev. Econ. Studies 40 (1973):

4 1.C. Econometrics of Unemployed Search 1. *Flinn, C. and J. Heckman. New Methods for Analyzing Structural Models of Labor Force Dynamics. J. Econometrics 18 (1982): *Wolpin, K. Estimating a Structural Search Model: The Transition from School to Work. Econometrica 55 (1987): *Van den Berg, G. Nonstationarity in Job Search Theory. Rev. Econ. Studies 57 (1990), pp Andrey Launov and Klaus Walde. Estimating Incentive and Welfare Effects of Non-Stationary Unemployment Benefits International Economic Review 54 (2013): *Flinn, C. Minimum Wage, Chapter 7. 1.D. Matching, Bargaining, and Search 1. *Dey, M. and C. Flinn. An Equilibrium Model of Health Insurance Provision and Wage Determination. Econometrica 73 (March 2005): *Postel-Vinay, F. and J-M Robin. Wage Dispersion with Worker and Employer Heterogeneity. Econometrica 70 (2002): Moscarini, G. Job Matching and the Wage Distribution. Econometrica 73 (2005): E Equilibrium Search 1. *Albrecht, J. and B. Axell. An Equilibrium Model of Search Unemployment. Journal of Political Economy 92 (October 1984): *Burdett, K. and D. Mortensen. Wage Differentials, Employer Size, and Unemployment. International Economic Review 39 (May 1998): F Equilibrium Search Applications 1. *Eckstein, Z. and K. Wolpin. Estimating a Market Equilibrium Search Model from Panel Data on Individuals. Econometrica 58 (1990): *Flinn, C. Minimum Wage, Chapter *Flinn, C. and J. Mullins. Labor Market Search and Schooling Investment. Forthcoming, International Economic Review (Draft of April 2014) Bontemps, C., J-M Robin, and G. van den Berg. An Empirical Equilibrium Job Search Model with Search on the Job and Heterogeneous Workers and Firms. International Economic Review 40 (November 1999):

5 1.G. Job Mobility 1. *Jovanovic, B. Job Matching and the Theory of Turnover. J. Pol. Econ. 87 (1979): Jovanovic, B. Matching, Turnover, and Unemployment. J. Pol. Econ. 92 (1984): *Flinn, C. Labour Market Structure and Inequality: A Comparison of Italy and the U.S. Review of Economic Studies 69 (August 2002): Mortensen, D. Specific Capital and Labor Turnover. Bell J. Econ. 9 (1978): Salop, S. Wage Differentials in a Dynamic Theory of the Firm. J. Econ. Theory 6 (1973): *Flinn, C. Wage and Job Mobility of Young Workers. J. Pol. Econ. 94 (1986): S88-S Miller, R. Job Matching and Occupational Choice. J. Pol. Econ. 92 (1984): McCall, B. A Dynamic Model of Occupational Choice. Journal of Econ. Dyn. and Control 15 (1994): *Coen-Pirani, D. Understanding Gross Worker Flows Across U.S. States. Journal of Monetary Economics 57 (October 2010): Postel-Vinay, F. and H. Turon. On the Job Search, Productivity Shocks, and Individual Earnings Processes. International Economic Review 51 (2010). 1.H Compensating Differentials 1. Sattinger, M. Compensating Wage Differences. Journal of Economic Theory 16 (1977): Mussa, M. and S. Rosen. Substitution and the Division of Labor. Economica 45 (1978): *Rosen, S. Hedonic Prices and Implicit Markets: Product Diffentiation in Pure Competition. Journal of Political Economy 82 (1974): *Hwang, H. Mortensen, D. and W.R. Reed. Hedonic Wages and Labor Market Search, Journal of Labor Economics 16 (1998): *Dey, M. and C. Flinn. Household Search and Health Insurance Coverage. Journal of Econometrics 145 (2008): Bonhomme, S. and G. Jolivet. The Pervasive Absence of Compensating Differentials, Journal of Applied Econometrics 24 (2009):

6 2.A Household Bargaining and Labor Supply 1. *McElroy, M. and M. Horney. Nash-bargained Decisions: Towards a Generalization of the Theory of Demand. International Economic Review 22 (1981): Manser, M. and M. Brown. Marriage and Household Decision-Making: A Bargaining Analysis. International Economic Review 21 (1980): Chiappori, P-A. Rational Household Labor Supply. Econometrica 56 (1988): McElroy, M. The Empirical Content of Nash-bargained Household Behavior. Journal of Human Resources 25 (1990): A. Kapteyn and P. Kooreman. Household Labor Supply: What Kind of Data Can Tell Us How Many Decision-Makers There Are? European Economic Review 36 (1992): *Lundberg, S. and R. Pollak. Separate Spheres Bargaining and the Labor Market, Journal of Political Economy 101 (1993): Browning, M, F. Bourguignon, P-A Chiappori, and V. Lechene. Incomes and Outcomes: A Structural Model of Intra-Household Allocation. Journal of Political Economy 102 (1994): *Browning, M. and P-A Chiappori. Efficient Intra-Household Allocations: A General Characterization and Empirical Tests," Econometrica 66: Kooreman, P. and A. Kapteyn. On the Empirical Implementation of some Game Theoretic Models of Household Labor Supply. Journal of Human Resources 25 (1990): *Del Boca, D. and C. Flinn. Endogenous Household Interaction. Journal of Econometrics 166 (2012): *Mazzocco, M. Household Intertemporal Behaviour: A Collective Characterization and a Test of Commitment, Review of Economic Studies 74 (2007): B Models of Household Formation and Dissolution 1. *Weiss, Y. and R. Willis. Children as Collective Goods and Divorce Settlements. Journal of Labor Economics 3 (July 1985): *Flinn, C. Modes of Interaction between Divorced Parents. International Economic Review (August 2000): Hauser, C. Child Support Enforcement and Children s Consumption. Unpublished manuscript, Downloadable at: 4. *Del Boca, D. and C. Flinn. Rationalizing Child Support Decisions. American Economic Review 85 (December 1995): *Del Boca, D. and R. Ribero. Visitations and Transfers after Divorce. Review of Economics of the Household 1 (2003):

7 6. Roff, J. A Stackelberg Model of Child Support and Welfare. International Economic Review 49 (2008): Brown, M. and C. Flinn. Family Law Effects on Divorce, Fertility, and Child Investment. Unpublished Manuscript, Downloadable at: 8. *Becker, G. A Theory of Marriage: Part I, Journal of Political Economy 81 (1973): Choo, E. and A. Siow. Who Marries Whom and Why? Journal of Political Economy.114 (2006): *Iyigun, M. and R. Walsh. Building the Family Nest: Pre-Marital Investments, Marriage Markets, and Spousal Allocations. Review of Economic Studies 74 (2007): *Del Boca, D. and C. Flinn. Household Behavior and the Marriage Market. Journal of Economic Theory 150 (March 2014): Chiappori, PA, Iyigun, M. and Y. Weiss. Investment in Schooling and the Marriage Market, American Economic Review 99 (2009): C Child Development 1. *P. Todd and K. Wolpin, Assessing the Impact of a School Subsidy Program in Mexico: Using a Social Experiment to Validate a Dynamic Behavioral Model of Child Schooling and Fertility, American Economic Review 96: *P. Todd and K. Wolpin, On The Specification and Estimation of The Production Function for Cognitive Achievement, Economic Journal 113: F3-F *F. Cunha, J. Heckman, and S. Schennach, Estimating the Technology of Cognitive and Noncognitive Skill Formation, Econometrica 78: Cunha, F. and J. Heckman, The Technology of Skill Formation, American Economic Review 97: *Weinberg, B., An Incentive Model of the Effect of Parental Income on Children, Journal of Political Economy 109: *Del Boca, D., C. Flinn, and M. Wiswall. Household Choices and Child Development. Review of Economic Studies 81 (January 2014): *Del Boca, D., C. Flinn, and M. Wiswall. Transfers to Households with Children and Child Development. (Draft of July 2014). Downloadable at: 7