Labour Market Theory

Lecture 2nd/ 3rd semester

Master in International Economics & Public Policy (MIEPP)

Lecturer: Klaus Wälde

Tutorial: Niklas Scheuer

A) Contents

The lecture offers insights into labour economics with an emphasis on theoretical analyses. We present research that studies how to reduce unemployment. The lecture also looks at the literature that proposes mechanisms that allow reducing inequality. Combining the two should allow students to understand how unemployment can be reduced while at the same time guaranteeing a sufficiently high income from working and from unemployment benefits.

B) Organisation

The lecture is structured very differently from standard lectures. In fact, one could argue that it is more of a mutual exchange than a lecture. See here for some first ideas. More background will be provided in the first lecture.

The slides used in the lecture are made available in the JGU Reader. An overview is here.

“Expert lectures” will be added after the corresponding presentations by students. This is why there are gaps (pages missing) in the document in the Reader.

C) Literature

• Acemoglu and Autor (2011) "“Skills, Tasks, and Technologies: Implications for Employment and Earnings"”

• Akerlof (1982) "Labor Contracts as Partial Gift Exchange"

• Albrecht, Navarro and Vroman (2009) "The Effects of Labour Market Policies in an Economy with an Informal Sector"

• Autor, Katz and Kearney (2008) “"Trends in U.S. wage inequality: revising the revisionists"

• Belmann, Bossler, Gerner and Hübler (2015) "Reichweite des Mindestlohns in deutschen Betrieben"

• Bentolila, Cahuc, Dolado and Le Barbanchon (2012) “Two-tier labour markets in the Great Recession: France versus Spain

• Blundell and MaCurdy (1999) "Labour supply: a review of alternative approaches"

• Booth (1995) “The Economics of the Trade Union

• Burda and Hunt (2011) “What Explains the German Labor Market Miracle in the Great Recession?

• Burda and Wyplosz (2012) Macroeconomics: A European Text

• Burdett and Mortensen (1998) “Wage Differentials, Employer Size, and Unemployment

• Burman (2013) "Taxes and Inequality"

• Cahuc and Zylberberg (2004) Labor Economics

• Cahuc,Postel-Vinay and Robin (2006): "“Wage Bargaining with On-the-job Search:Theory and Evidence”"

• Card, Heining and Kline (2013): "Workplace Heterogeneity and the Rise of West German Wage Inequality"

• Card, D., and A. Krueger (1997): Myth and Measurement: The New Economics of the Minimum Wage.

• Cherepnev and Wälde (2013) “Unemployment in OECD countries: Policy or Luck?”

• Chetty, Friedman and Saez (2013) "“Using Differences in Knowledge across Neighborhoods to Uncover the Impacts of the EITC on Earnings”"

• Diamond and Saez (2011) The Case for a Progressive Tax: From Basic Research to Policy Recommendations

• Dickens and Ellwood (2001) "Wither Poverty in Great Britain and the United States? The Determinants of Changing Poverty and Wether Work will Work"

• Donado and Wälde (2012) “How Trade Unions Increase Welfare

• Dustmann, Ludsteck and Schönberg (2009) "“Revisiting the German wage structure"”

• Eckstein and Lifshitz (2011) "Dynamic Female Labor Supply"

• Elsby, Hobijn and Sahin (2013) “"Unemployment Dynamics in the OECD”"

• Flinn (2006): “"MinimumWage Effects on Labor Market Outcomes under Search, Matching,and Endogenous Contact Rates"

• Golosov, Maziero and Menzio (forthcoming) “Taxation and Redistribution of Residual Income Inequality”

• Heckman (1993) "What has been learned about labor supply in the past twenty years?"

• Hosios (1990) “On The Efficiency of Matching and Related Models of Search and Unemployment”

• Huggett, Ventura and Yaron (2011) "Sources of Lifetime Inequality"

• Jaumotte and Tytell (2007) "The Globalization of Labor" in World Economic Outlook (April 2007, ch. 5)

• Keane (2011) "Labor Supply and Taxes: A Survey"

• Krause and Uhlig (2012) “Transitions in the German labor market: Structure and crisis

• Krebs and Scheffel (2013) "Macroeconomic Evaluation of Labor Market Reform in Germany"

• Launov and Wälde (2012) Slides for "Estimating incentive and welfare effects of non-stationary unemployment benefits"

• Launov and Wälde (2013) Slides for "Thumbscrews for agencies or for individuals? The Hartz Reforms in Germany" (see slide 8/24)

• Launov and Wälde (2013) “Thumbscrews for agencies or for individuals? How to reduce unemployment

• Lingens and Wälde (2009) “Pareto-Improving Unemployment Policies

• Manning, A. (2005): Monopsony in Motion: Imperfect Competition in Labor Markets. Princeton University Press.

• Meghir, Narita and Robin (2015) "Wages and Informality in Developing Countries"

• Moen (1997) “Competitive search equilibrium

• Moffitt (2003) “The Negative Income Tax and the Evolution of U.S. Welfare Policy

• Nickell (2006) "The CEP-OECD Institutions Data Set (1960-2004)"

• OECD (2008) "Growing Unequal - Income Distribution and Poverty in OECD Countries"

• OECD (2011) "Persistence of high unemployment: what risks? what policies?"

• OECD - Benefits and Wages

• Pencavel (1986) "Labor Supply of Men: A Survey"

• Piketty and Saez and Stantcheva (2014) "Optimal Taxation of Top Labor Incomes: A Tale of Threse Elasticities"

• Pissarides (1985) “Short-run Equilibrium Dynamics of Unemployment Vacancies, and Real Wages

• Postel-Vinay, F., and J.-M. Robin (2002): "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity"

• Prasad (2004) “"The Unbearable Stability of the German Wage Structure: Evidence and Interpretation"

• Reinberg and Hummel (2005) “"Höhere Bildung schützt auch in der Krise vor Arbeitslosigkeit”"

• Roemer, J. (1996): "Theories of Distributive Justice."

• Rogerson, Shimer and Wright (2005) “Search-Theoretic Models of the Labor Market: A Survey

• Saez (2002) “Optimal Income Transfer Programs: Intensive versus Extensive Labor Supply Responses

• Saez, Slemrod and Giertz (2012) "The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Crititcal Review"

• Satchi and Temple (2009) "Labor markets and productivity in developing countries"

• Sen (1979) "Equality of What?"

• Shapiro and Stiglitz (1984) "Equilibrium Unemployment as a Worker Discipline Device"

• Shimer (2012) “"Reassessing the ins and outs of unemployment”"

• Slemrod (1994) "Tax Progressivity and Income Inequality"

• Söhnlein, Weber and Weber (2012) "Qualifikationsspezifische Arbeitslosenquoten"

• Solow (1979) "Another possilbe Source of Wage Stickiness"

• Stigler (1961) “"The economics of information”"

• Strasser and Wälde “"Unemployment stocks and ‡flows for Germany" ”

Sueddeutsche Zeitung (28.07.2014)

• Ulyssea (2010) "Regulation of entry, labor market institutions and the informal sector"

• Valletta (2006) "The Ins and Outs of Poverty in Advanced Economies: Government Policy and Poverty Dynamics in Canada, Germany, Great Britain, and the United States"

• Wälde (2012) Applied Intertemporal Optimization