LaborEconomicsI

EC3361
Introduction
Jan14,2014

Instructor

Name:Dr JessicaPan
Office:1ArtsLink,AS20525
Phone:65166115
Email:jesspan@nus.edu.sg

ConsultationHours:Tuesday3pm4pm
Noneedtomakeanappointmentduringregularconsultation
hours.
TA:TBA
Email:TBA

EC3361 Introduction

ModuleInformation
Textbook:
Borjas,LaborEconomics6th Edition,McGrawHill
12Lectures(2hourseach)and10tutorials(1houreach)
Assessment:
ClassParticipation:10%
4ProblemSets:20%
PaperAssignment:30%
Final:40%

EC3361 Introduction

Lectures&Tutorials
LecturenotesmaybedownloadedfromIVLE/workbin
MadeavailableSundayeachweek
Tutorialsstarton3rd week
Workthroughexampleproblems
Reviewproblemsets
Discusspolicyissues/studentassignments

EC3361 Introduction

Assignments
Problemsetsandpaperassignmenttobecompletedingroupsof3.
Structureandtypesofquestionswillbesimilartothatinthe
final.
Groupsshouldbeformedwithintutorialgroups.
PaperAssignment:Shortessay
Style:Readabletoanoneconomist,thisshouldnot bean
academicpaper,butsomethingthatyoumightfindinacurrent
affairsmagazineorthediscussionsectioninthenewspaper.

EC3361 Introduction

PaperAssignment

Analysisaboutacurrentlabormarketpolicy.
NotlimitedtopoliciesinSingapore.
Forexample:Educationpolicies,immigrationpolicies,minimum
wages,unemploymentbenefits,jobtrainingschemes,income
inequality,humancapitalinvestment,babybonuses,marriagemarket,
fertility,ministerialsalaries.

Onlyrequirementisthatthetopichastobesomewhatrelatedtolabor
economicsandthecourse.
Ifyoudecidetoanalyzeatopicexplicitlydiscussedinclass,therehas
tobesubstantial valueadded.
Emailinstructorwithtopic

Ihighlysuggestapproachingthispaperbyfindingarecentnewsarticleas
yourstartingpoint(orafewarticles) possiblesourcesinclude:theAsk
NUSEconomistsSeriesintheST,theEconomist,WSJ,NYT,FTorcurrent
affairsblogssuchasfreakonomics.com,marginalrevolutionortheBecker
Posnerblog,etc.
Ask:NUSEconomistsSeries:
http://www.fas.nus.edu.sg/ecs/scape/news.html
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PaperAssignment
Paper:
Atmost3pages,1.5space,11pointfont,excludingfigures,
graphsandreferences.
Style:Readabletoanoneconomist,oped.
Duebeforereadingweek.
Comments:
Eachgroupwillbeassignedtoprepare12pagesofwritten
commentsonanarticleandtohostadiscussionduringthe
presentationsegment.
Presentation:
5(presentation)+5(comments)+5(Q&A)
Finalpaperthatincorporatescommentswillbedue2weeksafter
presentation.
EC3361 Introduction

PaperAssignment
Beforethepresentations,thearticlewillbedistributedtothe
tutorialgroup.
Studentsareexpectedtoreadthearticlepriortothepresentation.
Orderofthepresentationwillbedeterminedatrandom.
Groupspresentinglastwillcommentfirst.
Gradingwillbedoneonallcomponents,roughlybasedon:
FinalPaper+Presentation(20%)
WrittenCommentsandDiscussion(10%)
Classparticipationscoreswillalsobedetermined,inpart,by
willingnesstotakepartinQ&A.
Wewilldiscussdetailsofthepresentationlaterinthesemester.

EC3361 Introduction

Whatwillwestudy?
Studyoftheworkingsandoutcomesofthemarketforlabor.
Laborisunique?;notlikecapitalorotherinputstoproduction
Canonlyberented cannotbeseparatedfromworkers(non
pecuniaryfactorsimportant,institutions,etc)
Howemployersandemployeesrentlaborservicesclearly
constituteamarket
Respondtoincentivesofwages,prices,profitsandnon
pecuniaryaspectsofemploymentrelationship
Studyhowthisallocationoflaboroccurs

EC3361 Introduction

WhyStudy?

Personalreason:
Mostofuswillspendalargepartofourlivesinanemployment
relationship!
Andevenifnotinanexplicitemploymentrelationship,thedecisionon
whetherornottowork,intrahouseholdallocationofresources,
marriageandfertilitydecisionsissomethingwewillface.

Policyconsequences:
Laborisaveryimportantnationalresource careabout
understandinghowitisallocatedtofirms,occupationsandindustries.
Functioningofthismarketalsokeytounderstandingmanysocialand
economicissuese.g.unemployment,wageinequality,immigration,
discrimination,educationandtraining.
Eveninfinancialcrises,manyoftheissuespertaintolabor
economicssuchasunemployment,labormobilityandthesocial
effectsofjobloss.
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BasicsoftheLaborMarket
Participantsareassignedmotives:
Workerslookforthebestjob.
Firmslookforprofits.
Governmentusesregulationtoachievegoalsofpublicpolicy.
Minimumwages
Occupationalsafety
Taxesandsubsidies

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OurFocus
LaborMarketTheories:
Howfirms(demandside)andworkers(supplyside)respondto
incentives(bothpecuniaryandnonpecuniary)inthemarket.
Why do we need a Theory?
Focusontheessentialvariableswhileleavingoutother,less
crucial,factors.
Tradeoffbetweenrealismandsimplicity.
Agoodtheoryofthelabormarketshouldhaverealistic
assumptions,andshouldprovideempiricalimplicationsthat
canbetestedwithrealworlddata.

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OurFocus
Application of Theories:
Effectsofpublicpoliciesonthelabormarket.Use
supply/demandmodelstoevaluateeffectsofvarious
policies.
Dataisanimportantpartofthestudyoflabormarkets.How
tomeasuretheeffectswecareabout?
Constrainedbydataavailability focusoftextbookisonUS
labormarket.TryveryhardtorelatetoSingapore/Asia,but
dataandstudiesnotalwaysavailable!

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TypesofPolicyIssues
RiseinfemaleLFPoverthepastcenturyinmanyindustrialized
countries.
Impactofimmigrationonwageandemploymentopportunitiesof
nativebornworkers.
EffectsofworkfarebenefitsonSingaporeanworkerslaborsupply.
Whataretheeffectsofjobretrainingschemes?
Dominimumwagesincreasetheunemploymentrateoflessskilled
workers?
WhydidwageinequalityintheUS(andmanyotherdeveloped
countries)riserapidlyafter1980?
Aresubsidiestoeducationandjobtraininganeffectivewayto
improvetheeconomicwellbeingofdisadvantagedworkers?
Whataretheimplicationsofintergenerationalinequality?What
policymeasuresareeffectiveatreducinginequality?
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CourseOutline
Lecture1:IntroductionandOverview
Lecture13:LaborSupplyTheories
Lecture45:LaborDemand
Lecture612:Topics
Compensatingwagedifferentials
Investmentsinhumancapital
Wageinequality
MobilityandImmigration
DiscriminationintheLaborMarket
TradeUnionsandBargaining
Tobearranged:Speciallecturebygovernmenteconomistsfromthe
EconomistService.

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