ECONOMICS 3111: LABOUR ECONOMICS
Instructor: Mike ShannonFall 2018
Office: Regional Centre, RC3016DTelephone: 343-8382
e-mail: Office Hours:Monday, Wed., Friday1:00-2:30pm
Text:D. Benjamin, M. Gunderson, T. Lemieux and C. Riddell. Labour Market Economics. McGraw-Hill
Ryerson. Eighth edition, 2017. (Referred to as BGLR below). It provides a good survey of the
field with emphasis on Canadian research. Some assignment questions will be drawn from the text.
Overheads and References:
Electronic copies of the text overheads and selected other materials will be made available through my website:
Marking Scheme:
Assignments30%
Midterm25% (TBA pending possible schedule change)
Final Exam45%
Assignments:
The assignments will involve work with Canadian data sources including, CANSIM and public use microdata files especially theLabour Force Survey. We will need to use statistical software as part of this exercise. Information on software will be made available in the first week of classes. There will be 3-4 assignments.
Topics and Readings Additional readings may be added or others replaced during the year copies of many
of the supplemental readings are available from the course website.
1. Introduction and Preliminaries
- Concerns of Labour Economics: markets, policies and institutions.
- Data Sources- Real and nominal wages.
- Preliminaries: Measuring and Testing Economic Relationships.
- Overview of regression analysis: interpreting regression output.
- Supply and Demand as a Labour Market Model:
- Review, implications and shortcomings
Sources: Benjamin, Gunderson, Lemieux and Riddell, Ch. 1 and Ch. 7.
R. Freeman (2006) “Labor Market Imbalances: Shortages, Surpluses or Just Fish Stories”
Federal Reserve Bank of Boston Economic Conference.
2. Supply of Labour: who works and how much do they work?
- Basic model: how to allocate time? (Benjamin, Gunderson, Lemieux and Riddell, Ch. 2)
- The labour force participation decision and hours of work (BGLR Ch. 2, 4):
Application 1: Changing labour force participation of women
Application 2: The Retirement Decision.
Application 3: Length of the Workweek – over time, North America vs. Europe.
Additional Sources:
P. Kuhn and F. Lozano (2004) The Expanding Workweek? UC Santa Barbara.
C. Michelacci and J. Pijoan_Mas (2007) “Why do Americans Work more than Europeans?”
CEPR paper.
A. Alesina, E. Glaeser and B. Sacerdote (2005)Why do Amercian Work so Hard?IPPR
paper (website).
3.Labour Supply and Policy: Incentive Effects of Income SupportPrograms (BGLR, Ch. 3)
- Adding the welfare state to the model.
- The Canadian Self-sufficiency project: evidence on incentive effects.
- Welfare reform and Labour Supply of Single Mothers
- Labour supply: choice or constraints? (time permitting)
Additional Sources:
C. Michaloupoulos et al (2002) Making Work Pay: Final Report on the Self-Sufficiency
Project. Ottawa: SRDC.
R. Finnie and I. Irvine (2008) Welfare Enigma. C.D. Howe Institute Commentary.
T. Lemieux and K. Milligan (2007) “Incentive Effects of Social Assistance” Journal of
Econometrics.
4. Demand for Labour:
- Basic Demand for Labour in the Short-run and Long-run (BGLR, Ch.5)
- Applications of labour demand:
Labour demand and earnings: pay and productivity
What determines pay ? A demand perspective.
Trends in wage inequality:
- Trade, technology or institutions?
- Wage growth in the upper tail: demand or something else?
Optimal compensation (parts of Ch. 13)
Explaining long-term trends in employment by industry.
- Technology and Jobs (Autor)
- Laws of Derived Demand and Labour Demand Elasticity (time permitting)
- Quasi-Fixed Costs and labour demand, BGLR, Ch. 6
Sources: Benjamin, Gunderson and Riddell, Ch. 5, 6 and parts of Ch. 13
A. Krueger (1993) “How Computers have Changed the Wage Structure” Quarterly
Journal of Economics, 33-60.
A. Marshall Principles of Economics (on laws of derived demand): see website.
Autor, D., Katz, L. and Kearney, M. (2008) "Trends in US Wages Inequality: Revising the Revisionists" Review of Economics and Statistics 90(2), 300-323.
M. Veall (2012) "Top Income Shares in Canada" (CLSRN working paper 103).
“Symposium: The Top One-Percent” Journal of Economic Perspectives Summer 2013.
D. Autor (2014) “Polyani’s Paradox and the Shape of Employment Growth” (website)
5. Market Power and the Labour Market: Monopsony versus Competition
Sources: BGLR, Ch. 7 and part of Ch. 12
L. Kahn (2000) “The Sports Business as a Labor Market Laboratory” Journal of Economic
Perspectives Summer 2000 (an interesting example from baseball)
O. Ashenfelter, H. Farber and M. Ransom (2010) "Modern Models of Monopsony in Labor
Markets: a Brief Survey" Working Paper #554 Princeton University Industrial
Relations Section.
D.Streitfeldfeb Engineers Allege Hiring Collusion in Silicon Valley NY Times 2014/03/01.
J.Azar, J. Marinescu and M.Steinbaum (2017) Labor Market Concentration. Working Paper.
Discrimination and Wages: monopsony stories. Alternative explanations (Ch. 12)
6. Minimum Wages and Anti-Poverty Policies
Sources: BGLR, Ch. 7
D. Card and A. Krueger (1995) Myth and Measurement. Princeton: PUP.
Goldberg and D. Green (1999) Raising the Floor: the Social and Economic Benefits of
Minimum Wages Canadian Centre for Policy Alternatives (pro-minimum wage)
M. Gunderson (2007) Minimum Wages: Issues and Options for Ontario (Prepared for
Ontario Ministry of Finance).
D. Kuehn (2014) The Importance of Study Design in the Minimum Wage Debate. Economic
Policy Institute, Study Brief #384.
J. Richards (2007) Reducing Poverty: What has Worked and What should be Done Next.
C.D. Howe Commentary No. 255.
7. Human Capital and the Economics of Education and Training
- Education and Training as Investments
- Applications: Rates of return to education
Predicting university enrolment.
Funding for students: Grants? Loans? Nothing?
- Screening and signalling theories of education.
- Training: General Skills Training Problem and Solutions
Evaluating government training programs.
Sources: Benjamin, Gunderson and Riddell, Ch. 9
G. Becker (1975) Human Capital Ch. 2. (classic statement of the human capital view)
Burbidge, Collins, Davies and Magee (2012) “Effective Tax and Subsidy Rates on Human
Capital in Canada” Canadian Journal of Economics 45, 189-219.
K. Mousally-Sergieh and F. Vaillancourt (2009) Extra Earning Power: the Financial
Returns to Higher Education in Canada. C.D.Howe e-brief May, 2009.
D. Boothby and T. Drewes (2006) “Returns to Post-Secondary Education in Canada”
Canadian Public Policy XXXII, 2-19.
C. Neill (2008) The Effect of Student Loan Limits on University Enrolments CLSRN
Working Paper No. 4.
AUCC (2011) Trends in Higher Education. vol. 1 Enrolment (see website)
8. Unions
- Why are some jobs unionized? Explaining the share of jobs unionized.
- Explaining outcomes in unionized labour markets: modeling approaches.
- Effects of unions on labour markets.
Source: Benjamin, Gunderson and Riddell, Ch. 14, 15
J. Visser (2006) “ Union Membership Trends in 24 Countries” Monthly Labor Review.
Statistics Canada (2007) “Unionization” Perspectives on Labour and Income,v.8.
R. Freeman (2005) What do Unions Do? NBER Working Paper no. 11410.
P. Kuhn (1998) “Unions and the Economy: what we know, what we should know?”
Canadian Journal of Economics Nov. 1033-1056.
Susan Johnson (2002) “Canadian Union Density 1980 to 1998 and Prospects for the
Future: An Empirical Investigation” Canadian Public Policy28(3), September 2002.
C. Riddell and C. Riddell (2001) “Changing Patterns of Unionization: the North
American Experience, 1984-98”. UBC Discussion Paper 01-23.
O. Blanchard (2000) “The Future of Unions”
L. Ohanian (2011) "America's Public Sector Union Dilemma" (a right-wing view of unions,
website)
K. Warner (2012) Protecting Fundamental Labor Rights Lessons from Canada for the
United States. Centre for Economic and Policy Research.
9. Unemployment
- Concepts and Measurement (BGLR Ch.16)
- Theories of Unemployment: an overview (BGLR Ch.17): Rigid wages (Efficiency wage, Contract
and Insider-Outsider models and survey evidence)Matching and search approaches
- Policies and controversies: unemployment insurance, flexibility, the Canada-US gap,how low can
US unemployment go?
Source:BGLR, Ch. 16, 17
L. Katz (2010) Long-term Unemployment in the Great Recession Testimony for the Joint
Economic Committee U.S. Congress.
P. Kuhn C. Riddell (2010) "The Long-term Effects of UI: Evidence from New Brunswick
and Maine 1940-90" Industrial and Labor Relations Review v. 63.
M. Daly, B. Hobijn and B. Lucking (2012) "Why has Wage Growth Stayed Strong?" Federal Reserve Bank of San Francisco Economic Letter.
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