Labor economics

Objective

Labour economics is the study of the markets in which labour services are exchanged for wages. Contemporary analyses of the labour market emphasise the importance of the movement of jobs and labour. This course presents the tools and topics of labour economics. The course is divided in two parts. The main objective of the first part is to provide students with the theoretical tools used in modern labour economics. At the heart of these analyses are models that formalise job-seeking behaviours and the processes for matching labour with newly created jobs. The objective is to present these models and show how they can provide a better empirical and theoretical understanding of the determinants of employment, inequalities and the consequences of public intervention in the labour market. The second part of the course is devoted to the study of a number of key topics in modern labour economics. We will first attempt to understand how recent evidence challenge classical theories of labour supply and labour demand. Then, we will investigate how three major shocks, immigration, trade, and automation, change the equilibria on labour markets, and what the reactions of labour markets to these shocks tell us about how they work. We will also review some of the theories about how wages are set on labour markets. Finally, we will turn to recent evidence obtained using data on labour-market platforms, and see how they fit with search and matching theories. 

Planning

Part I (Franck Malherbet)

1. Job Search
2. Job Search models; extensions and public policies
3. Equilibrium search with on-the-job-search and wage determination
4. Job search in equilibrium: matching models
5. Job search in equilibrium; public policies

Part II (Roland Rathelot)

1. Labour supply
2. Labour demand
3. Immigration, trade, and automation
4. Wage setting, minimum wages, and labour market imperfections

References

Ashenfelter, O., D. and Card (éd.), Handbook of Labor Economics, volumes 3A, 3B, 3C, Amsterdam : Elsevier Science, North Holland.
Cahuc, P., Carcillo, S. and A. Zylberberg (2014), Labor Economics, MIT Press.
Pissarides, C. (2000), Equilibrium Unemployment Theory, 2nd edition, MIT Press.