PRELIMINARY SYLLABUS Georgetown University ECON-661 Labor Economics I Spring 2010 Luca Flabbi Department of Economics Room: ICC 554 E-mail: [email protected] Ph: (202) 687-6752 http://www9.georgetown.edu/faculty/lf74/ Time and Place: Class: W 2.30-5.00PM in ICC 550 O¢ ce Hours: T 10.00AM-12.00PM in ICC 554 or by appointment Description: The course will cover some of the most important topics in Labor Economics organized around four main areas: labor supply, human capital, compensating di¤erential mechanisms and search models of the labor market. From a methodological point of view, the objective of the course is to acquire the ability to understand and replicate empirical applications. Some topics will be covered in great details, other in less details but still in a rigorous and complete way, …nally some topics, albeit usually included in a traditional Labor Economics curriculum will not be covered in class unless some speci…c interest arises. Please note: references and topics denoted by * are required reading and they will be covered in class; references and topics denoted by - are additional voluntary reading and they may or may not be covered in class. All * papers and most of the - papers are available in PDF on Blackboard. Calendar: 1. Search Models of the Labor Market [Class 1 to 4] (a) Survey on empirical labor search: - Van den Berg 1999 - Eckstein and van den Berg 2005 (b) Baseline model and general results for identi…cation: * Flinn and Heckman 1982 (c) Search-Matching-Bargaining Models: * Returns to Schooling: Eckstein and Wolpin 1995 * Gender Di¤erentials: Flabbi 2009 - Health insurance: Dey and Flinn 2005 - Minimum Wage: Flinn 2006 (d) Equilibrium search models: - Theory: Albrecht and Axell 1984 [AA] - Theory: Burdett and Mortensen 1998 [BM] * Basic identi…cation results for BM: Mortensen 1990 - Estimation of AA: Eckstein and Wolpin 1990 - Estimation of BM with between market heterogeneity: Van den Berg and Ridder 1998 - Estimation of BM with within market heterogeneity: Bowlus, Kiefer and Neumann 1995 * Estimation of equilibrium search models with matched employer-employee data: Postel-Vinay and Robin 2002

2. Labor Supply [Class 5 to 6] (a) Surveys: * Blundell and MaCurdy 1999 - Myck and Reed 2006 (b) Sample Selection: * Heckman 1974 - Vella 1998 (c) Gender Di¤erentials: - Bowlus 1997 3. Compensating Di¤erentials [Class 7] (a) Baseline model: - Roy 1951 - Rosen 1974 * Rosen 1986 (b) Estimation of Roy Models: * Heckman and Sedlacek 1985 - Heckman and Honorè 1990 4. Human Capital [Class 8 to 9] (a) Baseline model: - Willis and Rosen 1979 * Becker 1993 [Selected chapters] (b) Mincerian regressions: - Polachek 2007 * Card 2001 * Heckman, Lochner and Todd 2003 - Mincer 1974 5. Exam [Class 10] 6. Bonus Topics [Class 11] 7. Students Presentations [Class 12 and 13] Course Requirements [relative weight]: 1. Midterm exam [40%]: It will be the only exam of the course and it will be late in the the semester on April 7. 2. Presentation [10%]: It will be an in-class presentation about the paper you are proposing to complete for the course. They will be held the during the last two classes: April 21 and 28. 3. Paper [50%]: It should be a replication study of some or all the empirical results included in papers already published. You can choose a paper from the list of references included in this syllabus or you may propose another paper. Each of you should choose a di¤erent paper and should previously discuss with me the choice. You will have one month from the last class to complete the assignement, i.e the assignement must be due by May 28.

2

References [1] Albrecht, J. and B. Axell (1984), “An Equilibrium Model of Search Unemployment”, Journal of Political Economy, 92, 824-840. [2] Becker, Gary Stanley, (1993, 3rd ed.) Human capital: a theoretical and empirical analysis, with special reference to education Chicago: The University of Chicago Press, 1993 [3] Blundell, R. and T. MaCurdy (1999) “Labor Supply: a Review of Alternative Approaches” in: Card and Ashenfelter (eds) Handbook of Labor Economics, V. 3, Amsterdam: Elsevier. [4] Bowlus, A. (1997), “A Search Interpretation of Male-Female Wage Di¤eretials”, Journal of Labor Economics, 15(4), pg. 625-657. [5] Bowlus, A., N. Kiefer and G. Neumann (1995), “Estimation of Equilibrium Wage Distribution with Heterogeneity”, Journal of Applied Econometrics, 10, pp. S119-131. [6] Card, D (2001), “Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems”, Econometrica, 69(5): 1127-1160. [7] Eckstein, Z. and G. J. van den Berg (2005) "Empirical Labor Search: A Survey ", Journal of Econometrics, (Forthcoming). [8] Eckstein, Z. and K. Wolpin (1990), “Estimating a Market Equilibrium Search Model from Panel Data on Individuals”, Econometrica, 58(4), 783-808. [9] Eckstein, Z. and K. Wolpin (1995), “Duration to First Job and the Return to Schooling: Estimates from a Search-Matching Model”, The Review of Economic Studies, 62(2): 263-286. [10] Flabbi, L. (2009), “Gender Discrimination Estimation in a Search Model with Matching and Bargaining", forthcoming, International Economic Review. [11] Flinn, C. and J. Heckman (1982), “New Methods in Analyzing Structural Models of Labor Market Dynamics”, Journal of Econometrics, 18: 115-168. [12] Heckman, J. (1974) “Shadow Prices, Market Wages, and Labor Supply”, Econometrica, 42, 679-694. [13] Heckman, J. (1979) “Sample Selection Bias as a Speci…cation Error”, Econometrica, 47, 151-161. [14] Heckman, J. and B. Honorè (1990) “The Empirical Content of the Roy Model”, Econometrica, 58, 1121-1149. [15] Heckman, J., L. Lochner and P. Todd (2003) “Fifty Years of Mincer Earnings Regressions” IZA Discussion Paper 775 [16] Heckman, J. and G. Sedlacek (1985) “Heterogeneity, Aggregation and market Wage Functions; an Empirical Model of Self-Selection in the Labor Market”, Journal of Political Economy, 93(6): 10771125. [17] Mincer, J. (1974) Schooling, Experience, and Earnings, New York: NBER Press. [18] Mortensen, D. (1990), “Equilibrium Wage Dispersion: a Synthesis”, in: J. Hartog, G. Ridder and J. Theeuwes (eds.) Panel Data and Labor Market Studies, Amsterdam: North-Holland. [19] Myck, M. and H. Reed (2006) “A Review of Static and Dynamic Models of Labor Supply and Labor Market Transitions” IFS Working Paper 06/15. [20] Postel-Vinay, F. and J-M Robin (2002). “Equilibrium Wage Dispersion with Worker and Employer Heterogeneity”, Econometrica, 70(6), 2295-2350. [21] Rosen, S. (1986) “The Theory of Equalizing Di¤erences”in in: Ashenfelter and Layard (eds) Handbook of Labor Economics, V. 1, Amsterdam: Elsevier.

3

[22] Rosen, S. (1974) “Hedonic Prices and Implicit markets; product di¤erantiation in pure competition” Journal of Political Economy. [23] Roy, A. (1951) “Some Toughts on the Distribution of Earnings”Oxford Economic Papers, 3(2): 135-146. [24] Van den Berg (1999), “Empirical Inference with Equilibrium Search Models of the Labour Market”, Economic Journal 109(F283-F306) [25] Van den Berg, G. and G. Ridder (1998), “An Empirical Equilibrium Search Model of the Labor Market”, Econometrica, 66, 1183-1221. [26] Vella, F. (1998) “Estimating Models with Sample Selection Bias: a Survey”, Journal of Human Resources, 33(1): 127-169.

4