MSc Economics

The course unit aims to equip students with skills to assess situations and critique policies affecting the labour market using the frameworks of modern economic theories. On completion of this unit successful students will be able to demonstrate:

• A good understanding of key economic concepts related to the demand for labour by firms and supply of labour by workers
• The ability to critically appraise labour market policies and reforms

The skills to critique theoretical models and empirical analyses

The course unit aims to equip students with skills to assess situations and critique policies affecting the labour market using the frameworks of modern economic theories. On completion of this unit successful students will be able to demonstrate:

• A good understanding of key economic concepts related to the demand for labour by firms and supply of labour by workers
• The ability to critically appraise labour market policies and reforms
• The skills to critique theoretical models and empirical analyses

Knowledge, Understanding and Intellectual Skills

• Be aware of the characteristics of labour markets in a range of different economies
• Interpret past and current labour market conditions through the lens of economic theory
• Understand and critically evaluate the policy recommendations made by labour market models and judge their applicability to a range of different labour market conditions
• Understand the implications for inequality arising from different labour market policies

Practical Skills

• Being able to read and evaluate the current economic literature on labour markets
• Understand the availability of relevant data sources
• Writing to communicate to economists and non-economists

Transferable Skills and Personal Qualities

• Analyse market conditions and identify an appropriate economic modelling framework to discuss current affairs pertaining to labour issues.

The contents of the course will be divided into 5 broad topics. The lectures will focus mainly on building the theoretical and analytical framework of the topics, while the tutorials will be used to discuss mock final examination questions based on an academic paper pertaining to the topics.

1. Neoclassical Model – Labour Demand and Labour Supply
2. Selection and the Roy Model
3. Minimum Wage, Labour Unions, Technological Change and International Trade
4. Search and Bargaining
5. Performance Pay, Worker-Firm Fixed Effects Model

Lectures and tutorials.

Coursework - 20%

Midterm exam - 30%

Final exam - 50%

The reading list below contains two academic papers per topic – one of these papers (marked by T) will be discussed in the tutorial sessions, and the other (marked by E) forms part of the essential reading list on which the final examination questions will be based. The papers marked E will not be discussed by the lecturer but students are encouraged to collaborate to comprehend those papers. Several other academic articles not listed here will be referred to in the lectures and tutorials – questions based on such articles will not be asked in the examinations beyond the information covered in the lectures.

• (T-1) Beaudry, Paul, David A. Green, and Benjamin Sand. 2016. “The Great Reversal in the Demand for Skill and Cognitive Tasks.” Journal of Labor Economics 34(S1): S199-S247.
• (E-1) Card, David. 1990. “The Impact of the Mariel Boatlift on the Miami Labor Market.” Industrial and Labor Relations Review 43(2): 245-257.

• (T-2) Hsieh, Chang-Tai, Eric Hurst, Charles I. Jones, and Peter J. Klenow. 2019. “The Allocation of Talent and U.S. Economic Growth.” Econometrica 87(5): 1439-1474.
• (E-2) Borjas, George J. 1987. “Self-Selection and the Earnings of Immigrants.” The American Economic Review 84(4): 772-793.
• (T-3) Aҫikgӧz, Ӧmer Tuǧrul, and Bariș Kaymak. 2014. “The rising skill premium and deunionization.” Journal of Monetary Economics 63: 37-50.

• (E-3) Autor, David H., David Dorn, and Gordon H. Hanson. 2013. “The China Syndrome: Local Labor Market Effects of Import Competition in the United States.” The American Economic Review 103(6): 2121-2168.
• (T-4) Shimer, Robert. 2005. “The Cyclical Behavior of Equilibrium Unemployment and Vacancies.” The American Economic Review 95(1): 25-49.

• (E-4) Brochu, Pierre, and David A. Green. 2013. “The Impact of Minimum Wages on Labour Market Transitions.” The Economic Journal 123(December): 1203-1235.
• (T-5) Brooks, Wyatt J., Joseph P. Kaboski, Yao Amber Li, and Wei Qian. 2021. “Exploitation of labor? Classical monopsony power and labor’s share.” Journal of Development Economics 150(May): 102627.

• (E-5) Lemieux, Thomas, W. Bentley Macleod, and Daniel Parent. 2009. “Performance Pay and Wage Inequality.” The Quarterly Journal of Economics 124(1): 1-49.