Course Outline/Reading List

Note:Readings discussed explicitly in class will be noted with (*). The readings indicated under the “additional reading” sections are optional. You are responsible for all other readings.

Topic 0: Course Preamble

  1. Charles, Kerwin, Erik Hurst and Matt Notowidigdo (2012). “Manufacturing Busts, Housing Booms, and Declining Employment: A Structural Explanation”. (See Erik’s webpage) (*)
  1. Elsby, Mike, Bark Hobijn, and Aysegul Sahin (2011). "The Labor Market in the Great Recession: An Update", Brookings Papers on Economic Activity, Fall.
  1. Moffitt, Robert (2012). "The U.S. Employment-Population Reversal in the 2000s: Facts and Explanations", Brookings Papers on Economic Activity, Fall. (*)
  1. Autor, David and Mark Duggan (2003). “The Rise in the Disability Rolls and the Decline in Unemployment”, Quarterly Journal of Economics, 118(1), 157-206.

Additional Reading: An Important Older Literature on Sectoral Shifts

  1. Lilien, David (1982). "Sectoral Shifts and Cyclical Unemployment", Journal of Political Economy, 90(4), 777-793.
  1. Abraham, Katherine and Larry Katz (1986). “Cyclical Unemployment: Sectoral Shifts or Aggregate Disturbances”, Journal of Political Economy, 94(3), 507-22.

Topic 1: Consumption Inequality

  1. Attanasio, Orazio, Erik Hurst and Luigi Pistaferri (2012). "The Evolution of Income, Consumption, and Leisure Inequality in the US, 1980-2010", in Improving Measurment of Consumer Expenditures (eds. Chris Carroll, Thomas Crossley, and John Sabelhaus). (You can find a version on Erik's webpage). (*)
  1. Autor, David, Larry Katz, and Melissa Kearney (2008). "Trends in U.S. Wage Inequality: Revising the Revisionists", Review of Economic and Statistics, 90(2): 300-23.
  1. Attanasio, Orazio and Steve Davis (1996). “Relative Wage Movements and the Distribution of Consumption”, Journal of Political Economy, 104(6), 1227-62.
  1. Attanasio, Orazio, Erich Battistin, and Hidehiko Ichimura (2004). "What Really Happened to Consumption Inequality in the US?", NBER Working Paper 10338.
  1. Krueger, Dirk and Fabrizio Perri (2006), "Does Income Inequality Lead to Consumption Inequality: Evidence and Theory" Review of Economic Studies, 73(1), 163-93. (*)
  1. Aguiar, Mark and Mark Bils (2011). "Has Consumption Inequality Mirrored Income Inequality", NBER Working Paper, 16807. (*)

Topic 2: Life Cycle Consumption

  1. Ghez and Becker (1975), The Allocation of Time and Goods over the Life Cycle, Chapter 2 (you can find it online at (*)
  1. Heckman, Jim (1974). “Life Cycle Consumption and Labor Supply: An Explanation of the Relationship Between Income and Consumption Over the Life Cycle”. American Economic Review, 64, 188-194.
  1. Carroll, Chris and Larry Summers (1991). “Consumption Growth Parallels Income Growth: Some New Evidence”, in Bernheim and Shoven, eds, National Saving and Economic Performance. Chicago University Press. (can be found on Carroll’s Faculty Web Page).
  1. Blundell Richard, Martin Browning, and Costas Meghir (1994) “Consumer Demand and the Life-Cycle Allocation of Household Expenditures”, Review of Economic Studies, 61, 57-80.
  1. Attanasio, Orazio and Martin Browning (1995), “Consumption Over the Life Cycle and Over the Business Cycle”, American Economic Review, 85(5), 1118-37.
  1. Deaton, Angus and Christina Paxson (1994). "Intertemporal Choice and Inequality", Journal of Political Economy. 102(3), 437-67. (*)
  1. Gourinchas, Pierre-Olivier and Jonathan Parker (2002). “Consumption over the Life Cycle”, Econometrica, 70, 47-89. (*)
  1. Angeletos, George-Marios, David Laibson, Andrea Repetto, Jeremy Tobacman, and Stephen Weinberg (2001). "The Hyperbolic Consumption Model: Calibration, Simulation, and Empirical Evalation", Journal of Economic Perspectives, 15(3), 47-68.
  1. Aguiar, Mark and Erik Hurst (2005). “Consumption versus Expenditure”, Journal of Political Economy, 113(5), 919-948. (Retirement Consumption) (*)
  1. Aguiar, Mark and Erik Hurst (2012). “Deconstruction Life Cycle Consumption”, Journal of Political Economy, 121(3), 437-92. (can be found on my web page – use the web page version). (*)

Additional Readings: Surveys of Consumption Literature

  1. Deaton, Angus (1992). Understanding Consumption, Clarendon Lectures in Economics, Oxford: Clarendon Press, 1992. (This is a good book to purchase).
  1. Attanasio, Orazio (1999). “Consumption”, Handbook of Macroeconomics, vol 1B, Chapter 11, pp. 741-812. (*) (I will provide a copy of this on my web page).

Additional Readings on Empirical Consumption (good to know)

  1. Hall, Robert (1978). “Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Theory and Evidence”, Journal of Political Economy, 86(6), 971 - 87. (Tests of PIH Model)
  1. Zeldes, Steve (1989). “Consumption and Liquidity Constraints: An Empirical Investigation”, Journal of Political Economy, 97 (2), 305-46. (Liquidity Constraints)
  1. Cochrane, John (1991). “A Simple Test of Consumption Insurance” Journal of Political Economy, 99(5), 957-976. (Risk Sharing)
  1. Deaton, Angus (1992) “Saving and Liquidity Constraints”, Econometrica, 59, 1221-48. (Precautionary Savings)
  1. Carroll, Chris (1997), “Buffer Stock Saving and the Life Cycle/Permanent Income Hypothesis”, Quarterly Journal of Economics, 112(1), 1-55. (Precautionary Saving)
  1. Hsieh, Chang-Tai (2003), “Do Consumers React to Anticipated Income Changes? Evidence from the Alaska Permanent Fund”, American Economic Review, 93(1), 397-405.
  1. Blundell, Richard, Luigi Pistaferri, and Ian Preston (2008). "Consumption Inequality and Partial Insurance", American Economic Review, 98(5), 1186-1210.
  1. Charles, Kerwin, Erik Hurst and Nick Roussanov (2009). “Conspicuous Consumption and Race”, Quarterly Economic Review, 124(2), 425-467. (Signaling and Consumption)
  1. Kaplan, Greg and Gianluca Violante (2013). "A Model of the Consumption Response to the Fiscal Stimulus Payments". Working paper (revise and resubmit at Econometrica).

Topic 4: Home Production

  1. Mincer, Jacob (1962). “Labor Force Participation of Married Women: A Study of Labor Supply”, in Aspects of Labor Economics (found here:
  1. Gronau, Ruben (1986). “Home Production: A Survey”, in Ashenfelter, O. and Layard, R (eds), Handbook of Labor Economics, North-Holland, Amsterdam, 273-304. (this can be found here:
  1. Benhabib, J, Richard Rogerson, and Randy Wright (1991), “Homework in Macroeconomics: Household Production and Aggregate Fluctuations”, Journal of Political Economy, 99, 1166-87. (*)
  1. Greenwood, Jeremy and Zvi Hercowitz (1991). "The Allocation of Capital and Time over the Business Cycle", Journal of Political Economy, 99(6): 1188-1214.
  1. Rupert, Peter, Richard Rogerson, and Randy Wright (2000), “Homework in Labour Economics: Household Production and Intertemporal Substitution”, Journal of Monetary Economics, 46, 557-79. (*)
  1. Aguiar, Mark and Erik Hurst (2007). “Life Cycle Prices and Production”, American Economic Review, 97(5), 1533-59. (*)
  1. Aguiar, Mark and Erik Hurst (2007). “Measuring Trends in Leisure: The Allocation of Time Over Five Decades”, Quarterly Journal of Economics, 122(3), 969-1006. (*)
  1. Aguiar, Mark, Erik Hurst and Loukas Karabarbounis (2012). "Time Use During the Great Recession", American Economic Review, 103(5), 1664-96.
  1. Guryan, Jon, Erik Hurst and Melissa Kearney (2008). "Parental Education and Parental Time With Children", Journal of Economic Perspectives, 22(3), 23-46.
  1. Rogerson, Richard and Johanna Wallenius (2012). "Retirement, Home Production, and Labor Supply Elasticities", working paper.

Topic 5: Occupational Choice and Aggregate Productivity

  1. Hsieh, Chang-Tai, Erik Hurst, Chad Jones, and Pete Klenow (2012). “The Allocation of Talent and Economic Growth”, working paper (see Erik’s web page). (*)
  1. Lagakos, David and Mike Waugh (2012). "Selection, Agriculture, and Cross-Country Productivity Differences", American Economic Review, 103(2), 948-80.
  1. Costinot, Arnaud, Dave Donaldson, and Cory Smith (2013). "Evolving Comparative Advantage and the Impact of Climate Change in Agricultural Markets: Evidence from a 9 Million Field Partition of the Earth". MIT working paper.

Topic 6: The Labor Market During the Great Recession

  1. Guerrieri, Veronica and Guido Lorenzoni (2011). "Credit Crises, Precautionary Savings and the Liquidity Trap", working paper (see Veronica's webpage).
  1. Jaimovich, Nir and Henry Siu (2012). "The Trend is the Cycle: Job Polarization and Jobless Recoveries", working paper (see Nir's webpage).
  1. Rothstein, Jesse (2011). "Unemployment Insurance and Job Search in the Great Recession", Brookings Papers on Economic Activity, Fall 2011, 143-201.
  1. Michaillat, Pascal (2012). "Do Matching Frictions Explain Unemployment? Not in Bad Times", American Economic Review, 102(4), 1721-50.

Additional Reading: An Important Older Literature on Long Run Changes in Labor Supply

  1. Juhn, Chinhui, Kevin Murphy, and Bob Topel (1991), “Why Has the Natural Rate of Unemployment Increased Over Time?”, Brookings Papers on Economic Activity, 1991(2), 75-142.
  1. Katz, Larry and Kevin Murphy (1992). “Changes in Relative Wages, 1963-1987: Supply and Demand Factors”, Quarterly Journal of Economics, 107(1), 35-78.
  1. Juhn, Chinhui, Kevin Murphy, and Bob Topel (2002), “Current Unemployment, Historically Contemplated”, Brookings Papers on Economic Activity, 2002(1), 79-136.

Topic 6: Regional Adjustments

  1. Blanchard, Olivier and Larry Katz (1992). “Regional Evolutions”, Brookings Papers on Economic Activity, 1992 (1), 1 – 75. (*)

Regional Housing Markets

  1. Saiz, Albert (2010). "The Geographic Determinants of Housing Supply", 125(3), 1253-1297.
  1. Guerrieri, Veronica, Daniel Hartley and Erik Hurst (2013). "Endogenous Gentrification and Housing Price Dynamics", Journal of Public Economics, 100(C), 45-60.
  1. Notowidigdo, Matthew (2011). "The Incidence of Local Labor Demand Shocks", working paper (see Matt's web page).

Regional Variation During Great Recession

  1. Mian, Atif and Amir Sufi (2012). "What Explains High Unemployment? The Deleveraging-Aggregate Demand Hypothesis", (see Amir’s webpage). (*)
  1. Sahin, Aysegul, Joseph Song, Giorgio Topa, and Gianluca Violante (2011). "Measuring Mismatch in the U.S. Labor Market", working paper (See Gianluca's webpage).
  1. Midrigan, Virgiliu and Thomas Phillipon (2011). "Household Leverage and the Recession", working paper (see Virgiliu's webpage)

Regional Multipliers

  1. Nakamura, Emi and Jon Steinnson (2013). "Fiscal Stimulus in a Monetary Union: Evidence from U.S. Regions". American Economic Review (forthcoming). See Emi's web page for a recent version. (*)
  1. Shoag, Danny (2012). "The Impact of Government Spending Shocks: Evidence on the Multiplier from State Pension Plan Returns". (See Danny's web page at Kennedy School).

Regional Convergence

  1. Barro, Robert and Xavier Sala-I-Martin (1991). "Convergence Across States and Regions", Brookings Papers on Economic Activity, 1991, 107-82. (*)

Regional Labor Markets

  1. Topel, Bob (1986). “Local Labor Markets”, Journal of Political Economy, 94(3), S111-43.
  1. Davis, Steve, Prakash Loungani, and Ramamohan Mahidhara (1997). "Regional Labor Fluctuations: Oil Shocks, Military Spending, and Other Driving Forces", working paper (see
  1. Autor, David, David Dorn, and Gordon Hanson (2011). "The China Syndrome: Local Labor Market Effects of Import Competition in the United States" working paper (see David Autor's web page). (*)

Regional Migration

  1. Kaplan, Greg and Sam Schulhofer-Wohl (2012). "Understanding the Long-Run Decline in Interstate Migration", working paper (see Greg's webpage at Princeton).

Regional Price Variation

  1. Coibion, Olivier, Yuriy Gorodnichenko, and Gee Hee Hong (2012). "The Cyclicality of Sales, Regular and Effective Prices: Business Cycle and Policy Implications" (see Yuriy's Berkeley webpage).
  1. Kaplan, Greg and Guido Menzio (2013). "Deconstructing Price Dispersion", Princeton working paper. (See Greg's Princeton webpage).

Topic 7: Understanding Small Businesses

  1. Evans, David and Boyan Jovanovic (1989). “An Estimated Model of Entrepreneurial Choice Under Liquidity Constraints”, Journal of Political Economy, 97(4), 808-27. (*)
  1. Evans, David, and Linda Leighton, “Some Empirical Aspects of Entrepreneurship”, American Economic Review, 79(3), 519-35.
  1. Holtz-Eakin, Douglas, David Joulfaian, and Harvey Rosen, (1994). “Sticking It Out: Entrepreneurial Survival and Liquidity Constraints.” Journal of Political Economy, 102, 53-75.
  1. Hurst, Erik and Annamaria Lusardi (2004). “Liquidity Constraints, Household Wealth, and Entrepreneurship”, Journal of Political Economy, 11292), 319-47. (*)
  1. Hamilton, Bart (2000). “Does Entrepreneurship Pay? An Empirical Analysis of the Returns to Self Employment”, Journal of Political Economy, 108, 604-31.
  1. Moskowitz, Toby and Annette Vissing Jorgensen. “The Returns to Entrepreneurial Investment: A Private Equity Premium Puzzle?”, American Economic Review, 94(2), 745-78.
  1. Hurst, Erik, Geng Li and Ben Pugsley (2011). "Are Household Surveys Like Tax Forms: Evidence from Income Underreporting of the Self Employed", Working Paper (see Erik's web page). (*)
  1. Hurst, Erik, Geng Li and Ben Pugsley (2011). "What Do Small Businesses Do?", Brookings Papers on Economic Activity, forthcoming (see my web page for details). (*)