Labor Economics Le Moyne College
Professor Ted Shepard Spring 2003
Syllabus
Office #RH336 Phone: 445-4235
E-mail: Shepard@Mail.LeMoyne.Edu
Office Hours: MWF mornings from 10:30-11:00, or by appointment. Monday afternoons are best for appointments.
Course Description. This course first develops the standard "Neoclassical " theory of the firm, focusing on supply and demand for labor as primary determinants of wages, employment, and incomes. Next the leading institutional critiques of the Neoclassical labor model are presented along with theories of discrimination, stratified labor markets, internal labor markets, and the causes and consequences of poverty. Basic economic concepts are used to analyze choices made by business and labor with respect to the production and allocation of resources, goods, and services within the economy. Economic models will prove valuable for understanding these choices, and for evaluating the effects of government and business policies and regulations on labor markets. Topics that will be covered include supply and demand analysis of labor markets, theories of wage determination, human capital theory, compensating wage differentials, unemployment, segmented labor market theory, minimum wages, the economic effects of unions, and employee compensation and incentive programs.
Goals and objectives: In this course you will develop a working knowledge of fundamental economic concepts of supply and demand, efficiency, opportunity cost, incentives, production, profits, and market structures. These concepts will be applied to evaluate labor market outcomes. In addition, you will be expected to apply these concepts by writing a policy paper and participating in a panel discussion in an area relevant to labor economics. The goal will be to apply economic models to evaluate contemporary developments in the labor market, and to gain an understanding of the significance of economic, institutional, and sociological forces in shaping and determining changes in the labor market.
Books and Materials: The required text for this course is The Economics of Labor Markets, 6th Edition, by Bruce Kaufman and Julie Hotchkiss. Additional recommended readings will be placed on reserve at the college library. The schedule for the readings is presented below—additional readings, films, or supplemental course materials may be assigned later on.
Special Challenges: If you have a documented disability and wish to discuss academic accommodations, please meet with me within the first week of class or as soon as possible thereafter. Students who believe that they have a disability that may influence their academic performance, but who have not yet had that disability documented, should immediately contact and meet with the Director of the Academic Support Center.
Course outline and schedule.
I. Introduction to Labor Economics (Week of Jan 13 and Jan 20)
1. Labor Economics, definition, scope, and areas of inquiry.
2. The supply and demand model.
3. Economic Models in Labor economics.
4. Application: Minimum Wages and Unemployment
Readings: 1. Text, Kaufman, The Economics of Labor Markets, Chapter 1
2. Stiglitz, Principles of Microeconomics, Chapters 3, 4, and 20
II. The Theory of Labor Supply (Week of Jan 27 and Feb 3)
1. The labor-leisure tradeoff
2. The individual labor supply curve
3. Factors influencing labor supply.
4. Elasticity of labor supply
5. Labor Force Participation Rates.
6. Applications/extensions of labor theory of supply
Readings: 1. Kaufman, Chapters 2 and 3
*** Test # 1, Friday, Feb 7 ***
III. Labor Demand. (Week of Feb 10, Feb 17, and Feb 24)
1. The derived demand for labor.
2. Short run and long run demand for labor.
3. Labor demand and market structure.
4. Labor demand elasticities.
5. Isoquant-isocost analysis
Readings: 1. Kaufman, Chapters 4 and 5
*** Test # 2 Friday, Feb. 28
Readings: 1. Kaufman, Chapter 6
V. Labor markets and household incomes. (Week of March 24 and March 31)
1. Human Capital theory; general and specific training
2. Occupational wage differentials
3. The distribution of earnings: major trends and alternative explanations
Readings: 1. Text, Chapter 7, 8,
2. Becker Human Capital (portions to be assigned)
*** Test # 3, Monday, April 7 ***
VI. Institutional theories of labor market outcomes (Week of April 7 and April 14)
1. Critiques of Neoclassical Wage theory.
2. Internal Labor markets.
3. Segmented labor markets
4. Dual labor market theory
Readings: 1. Text, Chapters 9 and 12
2. Doeringer and Piore Internal Labor Markets(portions to assigned).
3. Kerr, The Balkanization of Labor Markets
VI. Special topics in labor markets and public policy (Week of April 21 and April 28)
1. Minimum wages
2. Occupational health and safety
3. The economics of comparable worth
4. Welfare reform
5. Livable wage laws
6. The economics of human resource management
Readings: 1. Kaufman, Chapter 10
2. Shepard, Clifton, and Kruse, 'Flexible Work Schedules and Productivity: Some Evidence from the Pharmaceutical Industry', Industrial Relations, Jan 1996, pp. 123-140.
3. Shepard and Clifton, "Drug-testing, Does it really improve labor productivity?" WorkingUSA, Nov-Dec 1999
*** Final Exam, Monday May 12, 9:00-11:30 A.M.
Course Requirements
1. 3 Tests, the two highest grades are each worth 20 percent, the lowest grade will be dropped.
2. Labor policy paper 20 percent
3. Final Exam, 30 percent
4. Class Participation and problem sets10 percent
Students must prepare a labor policy paper, approximately 8 typed pages, summarizing the arguments and research related to a specific topic in labor economics. A list of potential topics will be provided in class. The papers are due on the last day of class. Problem sets will be assigned periodically, and students are expected to maintain a problem set notebook, which will be collected at least once during the course of the semester.