Participants will gain a solid knowledge of labour economics. There will be an emphasis on the interaction between theoretical and empirical modelling. Students will acquire an up-to-date insight into the functioning of labour and the complexity of the employment relationship. Students will learn alternative models of wage and employment determination (e.g., neoclassical labour supply labour and labour demand, search and matching models) in the first part of the course. In the second part, students will get acquainted with theories in labour economics that focus on the employment relationship (e.g. principal-agent theory, internal labour markets, design of incentive schemes) decisions and behaviour of workers (e.g. human capital investments, occupational choice) and firms (e.g., hiring, training, firing.). Insights from state-of-the art empirical work will be discussed alongside, so that students will become competent to critically evaluate economic theory in light of empirical evidence.

The course sheds light on the employment decisions from the perspective of the firm and the worker. Topics that are covered in the course are the neoclassical labour supply model, labour demand, wages and employment determination with reference to labor market institutions (i.e. minimum wages, unemployment insurance, social security), search and matching models, basic insights of human capital theory, worker mobility, and the design of incentive schemes.

Journal articles; chapters from Cahuc and Zylberberg (2004)

Microeconomics I