Labor Economics

Labor Economics straddles multiple subfields, reflected in three parts of this course:

The first part focuses on aspects in labor supply, in particular approaches to estimate behavioral labor supply responses to changes in the tax and transfer system, based on empirical, cross-sectional or panel data. We review two main strands in the literature that both consider nonlinearities and nonconvexities in budget sets, emanating from salient features of the tax and transfer system. One starts from the structural perspective of the neoclassical rational choice paradigm and estimates parameters of the decision process suitable for out-of-sample predictions. The other is a more non-parametric, quasi-experimental, and perhaps semi-structural approach, that studies bunching in the distribution of earnings.

The lectures of the second part cover structural microeconomic applications of job search models. This part includes the classical job search model, models with on-the-job search, matching-bargaining, and equilibrium search models. Specific attention is paid to methods of estimation of the job search model. Empirical methods focus on the use of duration data, offered and accepted wages, job offer arrival rates, and wage dispersion. Specific empirical studies will be discussed with an emphasis on nonwage job characteristics, the household dimension, and equilibrium search in the context of an economy with a formal and an informal sector.

The third part will focus on three related topics extensively theoretically developed and empirically investigated by labor economists: discrimination, migration, and crime. It explores the reasons and consequences of labor market discrimination of certain populations such as women and ethnic minorities. The issue of migration considers both individual making a relocation decision and the impact this may have on the host country’s labor market. And how criminal behavior and crime control policies have been theoretically framed and empirically investigated by economists to better understand the causes and consequences of offending.