E-mail: pingle@email.unc.edu   Web site:  www.unc.edu/~pingle

Prerequisites: Economics 101.  Students may not receive credit for both Economics 194 and 190.

This is a course in contemporary labor economics. This introduction to the field of labor economics will
explore the interactions between firms and workers and the corresponding models and theories of microeconomic analysis.  The course will emphasize the relationship between the supply of and demand for labor and demonstrate how these interactions can be used to understand economic and social phenomena.  The decisions of workers and firms that produce labor market outcomes incorporate some of today’s most important economic issues, including job training, schooling, retirement, wages, the distribution of earnings, employment and unemployment.

Text:  Ronald G. Ehrenberg and Robert S. Smith, Modern Labor Economics, Theory and Public Policy,
Addison-Wesley, 2000, Seventh Edition.

Course requirements : Readings will be from the text, hand-outs and other materials.  There will be two exams, each counting for 20% of the final grade and one cumulative final counting for 40% of the final grade.  There will be a paper that counts for 15% of the final grade.  Class participation will be worth 5% of the total grade.  There will be no  make-ups for exams.  If an exam is missed (a particularly good reason cleared by me in advance or permission from the Dean of Student’s office will be needed) the weight in the final grade will be added to the final exam. If two exams are missed, one will be counted as a zero.  If the paper is late, the grade will be reduced by 1/3 a letter grade for each day it is late.   For example, being one day late would make the grade on a B paper a B-.

Outline:          Dates:

I. Introduction and review. Chapters 1 and 2.                                                               Aug. 22, 27
 (Overview of labor markets, basics of supply and demand)

II.  Demand for Labor. Chapter 3                                                                               Aug 29, Sept. 5,
 (Theory of the firm, employment and marginal productivity)                                                10 and 12.
      Labor Demand Elasticities.  Chapter 4                                                                  Sept. 17 and 19.
 (Employment relationships, minimum wage policy)
 
EXAM 1: Labor Demand                                                                                            September 24

      Quasi-Fixed Labor Costs.  Chapter 5                                                                    Sept. 26, Oct. 1, 3
 (Benefits, job training as quasi-fixed costs, hours vs. workers)

III.  Labor Supply
      The Work Decision.  Chapter 6                                                                             Oct. 8, 10
 (The participation decision, choice of hours of work)
      Households, the Family and the Life Cycle.  Chapter 7                                            Oct. 15, 17
 (Female participation, household production, retirement)

PAPER:  part #1 due                                                                                                 October 17

IV.  Compensating Wage Differentials. Chapter 8                                                         October 22, 24, 29
 (Compensating Differentials, Matching workers and firms)                                                     and 28

EXAM 2: Labor Supply                                                                                                November 5

V.  Human Capital.  Chapter 9                                                                                     Oct. 31 and Nov.  7,
 (Schooling & training decisions, gender and career choice)                                                  12, 14 and 19

VI.  Worker Mobility.  Chapter 10                                                                                  Nov. 21, 26 and 28
 (Migration and immigration)

PAPER due                                                                                                              Nov. 26

VII. Topic: (with assigned reading)                                                                               Nov. 28 and Dec. 3
     Either Gender and Race Differentials, Chapter 12 or Earnings Inequality, Chapter 14

VIII. Unemployment                                                                                                     Dec. 3, 5
 (Theory of job search, frictional & structural unemployment and the phillips curve)

FINAL EXAM                                                                                                               Dec. 14  at  8 a.m.
 

Note that the information in the syllabus is subject to change and I will let you know if anything does change.  Time permitting, we may cover the topics listed in part VII. Some of the topics noted above may take longer than the classes allotted in the schedule.  Keep abreast of changes in the reading and lecture schedule.  However, note that the exam times will not be changed.  Before each exam I’ll note how far we’ve gotten in the material.  The final exam time is chosen by the Registrar’s Office.  Right now it is set for Friday, Dec. 14 at 8 a.m., which is the time for 9 a.m. MWF  classes.  If the registrar changes this for any reason (we are a slightly irregular time, 9 - 10:15) I will let you know. Any excuses or changes to the final exam time must be approved by the Dean of Students. The Honor Code is in effect for all work done in this course.

PAPER DESCRIPTION:

The paper is expected to be an economic analysis of a topical issue related to the labor market.  The issue should be narrow enough it can be discussed and analyzed with an economic analysis in a paper of reasonable length, no more than 10 to 12 pages typed, double-spaced.  The intent of the paper is not to have students do a long term paper on a topic, but to encourage you to apply economic analysis to a real labor market problem or question. The paper should contain a description of the issue, an economic analysis of the problem, some basic facts and  statistics that add to the discussion.  In addition to summing up the paper’s findings, the conclusion should describe  how more data and more thorough analysis could contribute to a better understanding of the issue.  These are not meant to be full of opinion or subjective comments from your sources.  Look at the facts, what does economic theory imply is happening?  Does the theory fall short or miss something?  What are the policy implications, and is existing policy having some effect?  From your analysis then you can draw conclusions about policy prescriptions or insights into potential sources of an economic problem or issue.

Double check the paper topics with me before doing in-depth research to make sure the issue is focused enough.  The first part of the paper is due Oct. 17.  This should contain a brief summary of the issue, why it is interesting, and, if possible, show it is linked to economic theory.  Keep this short – one or two pages.  This will allow me to make sure people have topics that they think are feasible.  This will also help me give feedback on topics, potential sources and possible frameworks for analysis.  The final draft is due Nov. 26.  The final draft should contain some background on the issue, the basic facts, an explicit discussion of the economic theory involved and the related analysis of the issue.  Document your sources.  A more detailed description of the paper and sample topics will be handed out separately.  Good luck.  If there are any questions please ask.

OFFICE HOURS:

Please come to office hours if you have questions or need review of anything covered in the text or in class.  Also, please see me if there are problems understanding exam questions, problem sets, or review questions.  If the stated times are not convenient, feel free to set up another time we can meet.