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COURSE SYLLABUS
LABOR ECONOMICS
Instructors:
Prof. John Sutherland Earle
Department of Economics
Central European University
Prof. Álmos Telegdy
Department of Economics
Central European University
Spring term, 2014/2015 academic year
Course level: MA
# Credits (# ECTS Credits): 3(6)
Pre-requisites:
Economics MA: Core Microeconomics, Core Econometrics
Economic Policy MA: Microeconomics for Economic Policy; Econometrics 2 or
Research and Econometrics.
Office hours
Earle: Mon 3-5, and by appointment
Telegdy: Wed 2-4, and by appointment
Course Description
The field of Labor Economics applies microeconomic analysis to important social issues
and public policies involving employment, wages, working conditions, and
unemployment. A partial list of issues and policies would include poverty, welfare
policy, minimum wages, overtime rules, layoff restrictions, education, job safety,
entrepreneurship, wage subsidies gender and racial discrimination, immigration and
internal migration, labor relations, unions and other institutions, division of labor within
families, unemployment insurance, and income inequality.
Learning Outcomes
To understand the functioning of labor markets and labor market policies; to understand
models that describe the labor market and policy effects; to understand empirical
microeconomic research on issues related to labor markets.
By the end of this course, students will be able to:
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 Understand the basic theories of labor markets
 Understand and analyze labor market policy outcomes
 Read scientific papers in the field of labor economics
 Understand econometric indentification issues
 Know the most important types of data
 Understand regression output related to labor economics
Course Requirements
Course requirements include a final examination and an optional empirical project. The
final exam will be held on the date set by the Department. The deliverables for the
empirical project consist of a very short research prospectus and short final paper, with
weights of 5 and 30 percent and due dates of May 21 and June 3, respectively. Students
who choose to do the paper should announce the topic chosen and the dataset by May 13
(by email to both instructors). The exam counts for 100 percent of the course grade for
students not selecting the project and 65 percent for those choosing the project.
The purpose of the empirical project is to provide an opportunity for students to
experience research using microdata, The analysis will involve application of a standard
technique in labor economics, such as estimating the return to schooling, the gender gap
in earnings, the pace of job reallocation, the determinants of worker mobility, etc. More
information on the project will be provided early in the term.
In addition to these requirements, discussion questions will be distributed towards the end
of the course. The purpose of these question sets is to stimulate additional thinking about
the course topics, but there is no requirement that the answers be turned in (nor will they
be graded). The style of questions will be similar to those that will appear on the
examinations.
COURSE SCHEDULE, READINGS
No textbook is fully appropriate for the level and topics of this course, but in several
topics we draw upon Derek Bosworth, Peter Dawkins, and Thorsten Stromback, The
Economics of the Labour Market, Addison Wesley Longman, 1996 (referred to below as
“BDS”). More importantly, we will be studying a number of articles from the
professional literature, also listed below. The "required" readings are indicated with “*”
while other, "optional" articles are included to encourage interested students to pursue
particular interests.
I. Methods of Analysis and Overview (1 lecture)
*Köllő, János (2011), „Employment, Unemployment and Wages in the First Year of the
Crisis.” In: The Hungarian Labor Market. Review and Analysis (Fazekas, Molnár eds.).
Budapest: IE-HAS and National Employment Foundation.
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II. Supply of Labor Services (2.5 lectures)
BDS, pp. 43-46, 54-60
*Blau, Francine, and Lawrence Kahn (2007), “Changes in the Labor Supply Behavior of
Married Women: 1980-2000.” Journal of Labor Economics 25(3), 393-438.
*Killingsworth, Mark (1983), Labor Supply, Cambridge: Cambridge University Press,
pp. 1-28, 78-87.
Bonin, Holger, and Rob Euwals (2001), “Labor Supply Preferences of East German
Women after German Unification,” WDI Working Paper.
*Lokshin, Michael (2004), “Household Childcare Choices and Women’s Work Behavior
in Russia,” Journal of Human Resources 39(4), 1094-1115.
III. Demand for Labor Services (3.5 lectures)
*Hamermesh, Daniel (1993), Labor Demand. New Jersey: Princeton University Press,
pp. 17-25, 44-52.
*Burda, Michael C., and Jennifer Hunt (2010), “What Explains the German Labor
Market Miracle in the Great Recession?” Brookings Papers in Economic Activity,
Economic Studies Program, The Brookings Institution, 42(1), 273-335.
*Dougherty, Sean, Verónica Frisancho Robles, and Kala Krishna (forthcoming),
“Employment Protection Legislation and Plant-Level Productivity in India.” India Policy
Forum (Also published as NBER Working Paper No. 17693).
*Manchin, Stephen, Joan Wilson (2004), “Minimum Wages in a Low-Wage Labour
Market: Care Homes in the UK.” Economic Journal 114, C102-C109.
IV. Human Capital (2 lectures)
*BDS, 16.3.1-3
*Hazans, Mihails, Ija Trapeznikova, and Olga Rastrigina (2008), “Ethnic and Parental
Effects on Schooling Outcomes before and during the Transition: Evidence from the
Baltic Countries.” Journal of Population Economics 21(3), 719-749.
Kertesi, Gábor and János Köllő (2002), “Economic Transformation and the Revaluation
of Human Capital – Hungary, 1986 – 1999,” Research in Labor Economics 20.
Munich, Daniel, Jan Svejnar, and Katherine Terrell (2005), “Returns to Human Capital
under the Communist Wage Grid and During the Transition to a Market Economy,”
Review of Economics and Statistics 83(1), 100-123.
*Nordin, Martin (2008), “Ability and Rates of Return to Schooling – Making Use of the
Swedish Enlistment Battery Test.” Journal of Population Economics 21(3), 703-717.
V. Gender and Race on the Labor Market (2 lectures)
*BDS, 24.2.1-2.2
*Brainerd, Elizabeth (2000), “Women in Transition: Changes in Gender Wage
Differentials in Eastern Europe and the Former Soviet Union,” Industrial and Labor
Relations Review 54(1), 138-62.
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*Fryer, Jr. Roland, and Glenn C. Loury (2005), “Affirmative Action and Its Mythology.”
Journal of Economic Perspectives 19(3), 147-162.
*Holzer, Harry J., Steven Raphael, and Michael Stoll (2006), “Perceived Criminality,
Criminal Background Checks, and the Racial Hiring Practices of Employers.” Journal of
Law and Economics 49, 451-480.
*Kertesi Gábor, and Gábor Kézdi (2011), “The Roma/Non-Roma Test Score Gap in
Hungary.” American Economic Review Papers and Proceedings, 101(3), 519-525.
VI. Compensating Differentials (2 lectures)
*Ashenfelter, Orley (2006), “Measuring the Value of a Statistical Life: Problems and
Prospects.” Economic Journal 116(510), C10-C23.
Berger, Mark, Glenn C. Blomquist, and Klara Sabirianova Peter (2008), “Compensating
Differentials in Emerging Labor and Housing Markets: Estimates of Quality of Life in
Russian Cities.” Journal of Urban Economics 63(1), 25-55.
*DeLeire, Thomas, and Helen Levy (2004), “Worker Sorting and the Risk of Death on
the Job.” Journal of Labor Economics 22(4), 925-953.
Felfe, Christina (2012), “The motherhood wage gap: What about job amenities?” Labour
Economics, 19(1), 59-67.
*Olson, Craig A. (2002), “Do Workers Accept Lower Wages in Exchange for Health
Benefits?” Journal of Labor Economics 20(2, pt. 2), S91-S114.
VII. Job Reallocation (2 lectures)
*Davis, Steven J., and John Haltiwanger (1999), “Gross Job Flows.” In: Handbook of
Labor Economics (Ashenfelter and Card eds.), Amsterdam: Elsevier, Sections 1-5.
Brown, J. David, and John S. Earle (2002) , “Gross Job Flows in Russian Industry Before
and After Reforms: Has Destruction Become More Creative?” Journal of Comparative
Economics 30(1).
Haltiwanger, John C., and Milan Vodopivec (2002), “Gross Worker and Job Flows in a
Transition Economy: An Analysis of Estonia.” Labour Economics 9(5), 601-630.
Haltiwanger, John C., and Milan Vodopivec (2003), “Worker Flows, Job Flows, and
Firm Wage Policies: An Analysis of Slovenia,” Economics of Transition 11(2).
Konings, Jozef, Hartmut Lehmann, and Mark Schaffer (1996), “Job Creation and Job
Destruction in a Transition Economy: Ownership, Firm Size, and Gross Job Flows in
Polish Manufacturing, 1988-91,” Labour Economics 3(3).
Lehmann, Hartmut and Wadsworth, Jonathan (2000), “Tenures That Shook the World:
Worker Turnover in Russia, Poland, and Britain.” Journal of Comparative Economics
28(4), 639-664.
*Haltiwanger, John H., Ronald Jarmin, and Javier Miranda (2013), “Who Creates Jobs?
Small vs. Large vs. Young.” Review of Economics and Statistics 95(2), 347-361.
Brown, J. David, and John S. Earle, “Do SBA Loans Create Jobs?” Working paper,
2013. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2205174
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VIII. Labor and International Markets (2 lectures)
*Hasan, Rana, Davishish Mitra, and K.V. Ramaswamy (2007) “Trade Reforms, Labor
Regulations, and Labor-Demand Elasticities: Empirical Evidence from India, Review of
Economics and Statistics 89(3), 466-481.
Revenga, Ana L. (1992), “Exporting Jobs?: The Impact of Import Competition on
Employment and Wages in U.S. Manufacturing.” Quarterly Journal of Economics
107(1), 255-284.
Heyman, Fredrik, Fredrik Sjöholm, and Patric Gustavsson Tingvall (2007), “Is there
really a Foreign Ownership Wage Premium? Evidence from Matched EmployerEmployee Data.” Journal of International Economics 73, 355-376.
Huttunen, Kristiina (2007), “The Effect of Foreign Acquisition on Employment and
Wages: Evidence from Finnish Establishments.” The Review of Economics and
Statistics 89, 497-509.
*Brown, J. David, John S. Earle, and Álmos Telegdy (2010), “Employment and Wage
Effects of Privatisation: Evidence from Hungary, Romania, Russia, and Ukraine,”
Economic Journal 120, 683-708.
*Earle, John S., Álmos Telegdy, and Gabor Antal (2013), “FDI and Wages: Evidence
from Firm-Level and Linked Panel Data for Hungary, 1986-2008.”
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2183305
*Hijzen, Alexander, Pedro S. Martins, Thorsten Schank, and Richard Upward (2013),
“Foreign-Owned Firms Around the World: A Comparative Analysis of Wages and
Employment at the Micro-Level.” European Economic Review 60, 170-188.
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