Lahore University of Management Sciences B. Sc. (Honours ) Programme Labor Economics Instructor: Office No.

: Phone Number: Email address: Office Hours: Prerequisites: Microeconomics I & Econ 211: Intermediate Microeconomics I OR Econ 210: Econ 231: Econometrics I Introduction: The labour market is central to any discussion of the economy. This course covers selected aspects concerning its operation, teaching a range of contemporary and traditional topics in labour economics. The aim is to give students knowledge in selected areas and familiarize them with current research techniques. Considerable attention is devoted to policies and institutions affecting supply and demand. The main topics under discussion during the course are: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Human Capital Approach Labour Supply Labour Demand Aggregate Outcomes in the Labour Market Migration and Turnover Labour Unions Labour Market Discrimination Job Search and Matching Process Intergenerational Mobility Crime and the Labour Market Lyyla Khalid Room: 241 Telephone Ext.: lyyla@lums.edu.pk

Basic Texts: 1. 2. 3. Borjas, George J. (2000) Labor Economics, 2nd Edition, Irwin McGraw Hill, New York. Filer, Randall K., Daniel S. Hamermesh, and Albert Rees (1996) The Economics of Work and Pay, 6Th Edition, Harper Collins: New York. Ehrenberg, Ronald G. and Robert S. Smith (1997) Modern Labor Economics: Theory and Public Policy, 6th Edition, Addison-Wesley, New York.

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Berndt, E.R., The Practice of Econometrics: Classic and Contemporary, AddisonWesley, 1991.

Additional Readings:
1. Tyler, Murnane and Willet (2000). Estimating the Labor Market Signaling Value of the GED. The Quarterly Journal of Economics, Vol. 115, No. 2. (May, 2000), pp. 431-468. Angrist and Lavy (1999). Using Maimonides' Rule to Estimate the Effect of Class Size on ScholasticAchievement The Quarterly Journal of Economics, Vol. 114, No. 2. (May, 1999), pp. 533-575. Card, D (2001) Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems Econometrica, Vol. 69, No. 5. (Sep., 2001), pp. 1127-1160. Todd and Wolpin (2003). On the Specification and Estimation of the Production Function for Cognitive Achievement. The Economic Journal, Royal Economic Society 2003.

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3. 4.

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Becker, G. Human Canital, Columbia University Press, 1964. Brown, James, Why Do Wages Increase with Tenure? On-the-Job Training and LifeCycle Wage Growth Observed Within Firms, American Economic Review, December 1989 Ransom, M., Seniority and Monopsony in the Academic Labor Market, American Economic Review, March 1993. Mroz, Thomas, The Sensitivity of an Empirical Model of Married Womens Hours of Work to Economic and Statistical Assumptions, Econometrica, July 1987. Mincer, J. and H. Ofek, Interrupted Work Careers: Depreciation and Restoration of Human Capital, Journal of Human Resources, Winter 1982. Ashenfelter, O. and R. Layard, eds., Handbook of Labor Economics, Volume 1, NorthHolland, 1986. Killingsworth, M. Labor Supply, Cambridge University Press, 1983. Pencavel, J. Labor Supply of Men: A Survey, in Ashenfelter, O. and R. Layard, eds. Handbook of Labor Economics, Volume I, 1986. Ragan, J., Investigating the Decline in Manufacturing Quit Rates, Journal of Human Resources, Winter 1984. Rees, Albert, An Essay on Youth Joblessness, Journal of Economic Literature, June 1986.
Card and Krueger. (1994) Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania. The American Economic Review, Vol. 84, No. 4. (Sep., 1994), pp. 772-793.

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9. 10. 11. 12. 13. 14. 15.

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Ragan, J. and C. Tremblay, Testing for Employee Discrimination by Race and Sex, Journal of Human Resources, Winter 1988.

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Goldin and Rouse (2000). Orchestrating Impartiality: The Impact of "Blind" Auditions on Female Musicians. The American Economic Review, Vol. 90, No. 4. (Sep., 2000), pp. 715-741. Nardinelli and Simon. (1990). Customer Racial Discrimination in the Market for Memorabilia: The Case of Baseball. The Quarterly Journal of Economics, Vol. 105, No. 3. (Aug., 1990), pp. 575-595. Zimmerman, D. J (1992). Regression Toward Mediocrity in Economic Stature. The American Economic Review, Vol. 82, No. 3. (Jun., 1992), pp. 409-429. Becker, G. S. Crime and Punishment: An Economic Approach. The Journal of Political Economy, Vol. 76, No. 2. (Mar. - Apr., 1968), pp. 169-217. Grogger, J. Market Wages and Youth Crime. Journal of Labor Economics, Vol. 16, No. 4. (Oct., 1998), pp. 756-791.

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Course Organization: There will be twenty-eight 100-minute lectures. Course Grading: Assignments (2): Research Paper Quizzes Mid-Term Exam Final Examination 10% 10% 15% 30% 35%

Tentative Schedule: Topic Module 1: Human Capital Approach Session 1 The Supply of Skills: Investment in Human Capital The Supply of Skills: Investment in Human Capital The Supply of Skills: Investment in Human Capital Ch.3, FHR, Ch. 7, Borjas Ch. 5, Berndt (handouts) Ch.3, FHR, Ch. 7, Borjas Mincer and Ofek Ch. 5, Berndt Ch.3, FHR, Ch. 8, Borjas Ch. 5, Berndt Brown Reading

Session 2

Session 3

Session 4

Review of Econometrics Concepts OLS, IV, Proxy Variable Approach

Handouts, (Wooldridge)

Session 5

Education Production Functions, Empirical Applications

Angrist and Lavy (1999) Todd and Wolpin (2003)

Module 2: Labour Supply Session 6 Labor Force Participation Ch. 1, Filer, Hamermesh, and Rees (FHR), Ch. 2, Borjas Ch. 2, FHR, Ch. 2, Borjas Ch. 11, Berndt Killingsworth, Ch. 2, FHR, Ch. 3, Borjas Mroz Pencavel

Session 7

Hours of Work and Hours of Effort

Session 8 Module 3: Labor Demand Session 9 Session 10 Session 11

Hours of Work and Hours of Effort

The Demand for Labor in Markets The Demand for Labor in Markets Applications: Case Studies (minimum wages and employment)

Ch.4, FHR, Ch. 4, Borjas Ch. 9, Berndt Ch.4, FHR, Ch. 4, Borjas Ch. 9, Berndt TBA

Module 4: Aggregate Outcomes in Labor Markets Session 12 Session 13 Supply and Demand Together Midterm Exam Ch.7, FHR, Ch. 9, Borjas Ch.6, FHR, Ch. 8, Borjas

Module 5: Migration and Turnover Session 14 Session 15 Module 6 : Labour Unions Session 16 Session 17 Labour Unions Labour Unions Migration and Turnover Migration and Turnover

Ch.7, FHR, Ch. 9, Borjas

Borjas ( ) Borjas ( )

Module 7 : Labour Market Discrimination

Session 18 Session 19 Session 20 Session 21

Effects of Race and Gender on Earnings Effects of Race and Gender on Earnings Inequality of Earnings and Income Empirical Evidence (Employer Discrimination and Customer Discrimination)

Ch.14, FHR Ch. 10, Borjas Reder Ch.14, FHR Ch. 10, Borjas Ch.15, FHR Ch. 9, Borjas Goldin and Rouse (2000) Nardinelli and Simon (1990)

Module 8: Job Search and Matching Process Session 22 Session 23 Job Search and Labor Market Analysis Job Search, The Duration of Unemployment, and the Phillips Curve Ch.6, FHR, Ch. 12, Borjas Mortensen Mortensen Ch. 13, Borjas

Module 9: Intergenerational Mobility Session 24 Intergenerational Mobility (Definition and Measurement) Intergenerational Mobility (Estimates, International Comparison and Changes over time) Solon (1992) Zimmerman (1992) Solon (1992) Zimmerman (1992)

Session 25

Module 10 : Crime and the Labour Market Session 26 Session 27 Crime and the Labour Market Crime and the Labour Market Levitt (1998) Grogger (1998)