Zhejiang University of Technology International Summer Session ECON350: Labor Economics Term: Summer, 2017 Professor: Pending Class Duration: Monday through Friday Total contact hours: 60 hours (2 hours each) Course Description The aim of this course is to acquaint students with traditional topics in labor economics and to encourage the development of independent research interests. We will cover a systematic development of the theory of labor supply, labor demand, and human capital. Topics include wage and employment determination, turnover, search, immigration, unemployment, equalizing differences, and institutions in the labor market. There will be particular emphasis on the interaction between theoretical and empirical modeling. Course Material Textbook Author Press The Handbook of Labor Economics. Vol. 1. Mostly Harmless Econometrics: An Empiricist's Companion Ashenfelter, Orley, and Richard Layard Angrist, Joshua, and Jorn-Steffen Pischke North-Holland Princeton University Press Grading 3 problem sets 30% Empirical project 30% Final exam 40% A 93-100 B- 80-82 D+ 67-69 A- 90-92 C+ 77-79 D 63-66 B+ 87-89 C 73-76 D- 60-62 B 83-86 C- 70-72 F 0-59 Course Objective The aim of this course is to acquaint students with traditional topics in labor economics and to encourage the development of independent research interests. We will cover a systematic development of the theory of labor supply, labor demand, and human capital. Topics include wage and employment determination, turnover, search, immigration, unemployment, equalizing differences, and institutions in the labor market. There will be particular emphasis on the
interaction between theoretical and empirical modeling. Prerequisites are intermediate microeconomics and a course in econometrics. Assignments Problem Sets There are three graded problem sets during the semester, as well as one ungraded homework assignment early in the semester. Empirical Project This project asks you to review, replicate, and extend an empirical paper from our reading list. The paper should be one that we have not covered in detail in class. Your write-up should have three major components: A. Review 1. What questions does the study ask? Why are these questions of economic interest? What are the most important findings in the paper? 2. Where does this paper fit in the relevant literature? What were the findings at the time the paper was written? What is the contribution of this particular paper? What has been done on this topic since this paper was published? Are the paper's findings still relevant? 3. What data were used? Are they reliable enough for the researcher's purposes? Are better data available now? What would constitute an ideal data set? 4. What would be an ideal research design for the question at hand? Are the econometric techniques used in the study sensible and do they appear to have been correctly implemented? What assumptions support a causal interpretation of the results presented in the paper? Are these assumptions discussed adequately? Are the results reasonably convincing why or why not? B. Replication Identify the main findings and use the authors' data to replicate these results if possible. If the data cannot be obtained, construct the same sort of estimates using a data set of your choosing. Choose a data set that you would expect to generate similar results. Summarize and compare your replication results to the original results in a table. Discuss why you think your results differ from the original (if they do). C. Extension Extend the work in some way. Do this either by (a) estimating alternative interesting specifications that the author might have tried or that would shed further light on the issues raised in the paper (e.g., specification checks or subsamples of special interest), or (b) collecting new data and producing results for this new sample. Any analysis of new data should include specification and robustness checks of the sort you would hope to see in a study of this nature.
A word to the wise: The product of this exercise is an essay, not unlike the many that you will spend the rest of your life writing. So pick a style guide and master it (Strunk and White's The Elements of Style is my favorite). A second word: You'll spend the rest of your life writing about numbers. Strunk and White don't discuss that and it doesn't come naturally. Learn how to do it by imitating the good work of others. Final Exam There will be an in class final exam at the end of the semester. If you are going to miss the final exam, you need to provide the professor a typewritten petition explaining and documenting the reason why you will miss the exam at least one week before the final exam. If your petition fail to be approved, then you have to take the exam. No makeup exam will be given. The final exam will cover material from the lectures and the readings, and will be a combination of multiple choice, short answer, and problem solving type questions. Course Schedule Week Topics Activities 1 Labor markets Problem set 1 a) Goldin, Claudia. "Labor Markets in the 20th Century." NBER Reading Historical Working Paper no. 58, (June 1994). b) Farber, Henry. "Job Loss and the Decline in Job Security in the United States." Princeton University Industrial Relations Section, Working Paper no. 520, 2007. Basics; review of duality a) Abbott, Michael, and Orley Ashenfelter. "Labor Supply, Commodity Demand and the Allocation of Time." Review of Economic Studies 43, no. 3 (1976): 389-411. b) Ashenfelter, Orley, and James Heckman. "The Estimation of Income and Substitution Effects in a Model of Family Labor Supply." Econometrica 42, no. 1 (1974): 73-86. Tax and transfer programs a) Eissa, Nada, and Jeffrey Leibman. "Labor Supply Response to the Earned Income Tax Credit." Quarterly Journal of Economics 111, no. 2 (1996): 605-637. Theoretical and empirical analysis of negative income tax (NIT) programs a) Blank, Rebecca. "Evaluating Welfare Reform in the United States." Journal of Economic Literature 40 (2002) The life-cycle model; theory; the Institute of Statistics and Econometrics; basic panel econometrics a) Lucas, Robert E., and Leonard Rapping. "Real Wages, Employment, and Inflation." Journal of Political Economy
77, no. 5 (1969): 721-764 b) Devereux, Paul J. "Small Sample Bias in Synthetic Cohort Models of Labor Supply." The Journal of Applied Econometrics 22, no. 4 (2007): 839-848. 2 Cab drivers, stadium vendors, and bicycle messengers a) Camerer, Colin, Linda Babcock, George Lowenstein, and Richard Thaler. "Labor Supply of New York City Cabdrivers: One Day at a Time." Quarterly Journal of Economics 112 (1997): 407-441. b) Oettinger, Gerald S. "An Empirical Analysis of the Daily Labor Supply of Stadium Vendors." Journal of Political Economy 107, no. 2 (1999): 360-92. Household family models; theory of time allocation; IV/Wald estimators a) Bronars, Stephen, and Jeff Grogger. "The Economic Consequences of Unwed Motherhood: Using Twins as a Natural Experiment." American Economic Review 84, no. 5 (1994): 1141-1156. b) Browning, M. "Children and Household Economic Behavior." Journal of Economic Literature 30, no. 3 (1992): 1434-1475. Quantity/quality trade-offs a) Rosenzweig, Mark, and Junsen Zhang. "Do Population Control Policies Induce More Human Capital Investment? Twins, Birthweight, and China's "One Child" Policy." Review of Economic Studies 76, no. 3 (2009): 1149-1174. Neoclassical demand theory; review of Hicks-Marshall formulas a) Card, David. "Unexpected Inflation, Real Wages, and Employment Determination in Union Contracts." American Economic Review 80, no. 4 (1990): 669-88. Empirical studies of immigration effects a) Johnson, George E. "The Labor Market Effects of Immigration." Industrial and Labor Relations Review 33, no. 3 (1980): 331-341. b) Borjas, George. "The Economic Benefits from Immigration," Journal of Economic Perspectives 9, no. 2 (1995): 3-22. 3 Minimum wages; review of monopsony a) Card, David. "Using Regional Variation to Measure the Effect of the Federal Minimum Wage." Industrial and Labor Relations Review 46, no. 1 (1992): 22-37. Differences-in-differences methods; the M&M controversy a) Angrist, Joshua, and Jorn-Steffen Pischke. "Parallel Worlds: Fixed Effects, Differences-in-Differences, and Panel Effects." Reading Problem set 2 Reading
Chapter 5 in Mostly Harmless Econometrics: An Empiricist's Companion. Princeton University Press, 2008. ISBN: 9780691120355. Union relative wage effects a) Jakubson, George. "Estimation and Testing of the Union Wage Effect Using Panel Data." Review of Economic Studies 58, no. 5 (1991): 971-991. Bargaining and efficient contracts a) Brown, James N., and Orley Ashenfelter. "Testing the Efficiency of Employment Contracts." Journal of Political Economy 94, no. 3 (1986): S40-S87. Schooling experience and earnings; basic theory; ability bias a) Tyler, John, Richard J. Murnane, and John Willett. "Estimating the Labor Market Signaling value of the GED." Quarterly Journal of Economics 115 (2008): 431-468. 4 Signaling and returns to schooling econometrics a) Kling, Jeffrey. "Interpreting Instrumental Variables Estimates of the Returns to Schooling." Journal of Business and Economic Statistics 19, no. 3 (2001): 358-364. b) Card, D. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems." Econometrica, 69, no. 5 (2001): 1127-1160 Returns to experience and on-the-job training (OJT) a) Autor, David H. "Why do Temporary Help Firms Provide Free General Skills Training?" Quarterly Journal of Economics 116, no. 3 (2001): 1409-1448. Education production: school inputs, school quality, student and teacher incentives a) Angrist, Joshua, and J. Guryan. "Does Teacher Testing Raise Teacher Quality? Evidence from State Certification Requirements." Economics of Education Review 27, no. 5 (2008): 483-503. b) Duflo, Esther. "Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment." American Economic Review 91 (2001): 795-813. Competition and regulation a) Clark, Damon. "The Performance and Competitive Effects of School Autonomy." Journal of Political Economy 117, no. 4 (2009): 745-783. Human capital policy and higher education a) Anderson, Michael. "Multiple Inference and Gender Differences in the Effects of Early Intervention: A Reevaluation of the Abecedarian, Perry Preschool, and Early Reading
Training Projects." Journal of the American Statistical Association 103, no. 484 (2008): 1481-1495. b) Dynarksi, Susan. "Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion." American Economic Review 93, no. 1 (2003): 279-288. 5 Evaluation of government training programs a) Smith, Jeffrey, and Petra Todd. "Does Matching Overcome LaLonde's Critique of Nonexperimental Estimators?" Journal of Econometrics 125, no. 1-2 (2005): 305-353. Externalities and peer effects a) Moretti, Enrico. "Estimating the Social Return to Higher Education: Evidence from Longitudinal and Repeated Cross-Section Data." Journal of Econometrics 121, no. 1-2 (2004): 175-212. b) Mas, Alexandre, and Enrico Moretti. "Peers at Work." American Economic Review 99, no. 1 (2009): 112-145. Theory; wage gaps a) Neal, Derek. "The Measured Black-White Wage Gap among Women is Too Small." Journal of Political Economy 112, no. S1 (2004): S1-S28. Anti-discrimination policy a) McCrary, J. "The Effect of Court-Order Hiring Quotas on the Composition and Quality of Police." American Economic Review 97 no. 1 (2008): 318-353. Problem set 3 Final Exam Policies Attending Policy Regular and prompt attendance is required. Under ordinary circumstances, you may miss two times without penalty. Each absence over this number will lower your course grade by a third of a letter and missing more than five classes may lead to a failing grade in the course. Arriving late and/or leaving before the end of the class period are equivalent to absences. Policy on Late Withdrawals In accordance with university policy, appeals for late withdrawal will be approved ONLY in case of medical emergency and similar crises. Academic Honesty The Zhejiang University of Technology expects all students to do their own work. Instructors will fail assignments that show evidence of plagiarism or other forms of cheating, and will also report the student's name to the University administration. A student reported to the University for cheating is placed on disciplinary probation; a student reported twice is suspended or expelled. Special Needs or Assistance
Please contact the Administrative Office immediately if you have a learning disability, a medical issue, or any other type of problem that prevents professors from seeing you have learned the course material. Our goal is to help you learn, not to penalize you for issues which mask your learning.