Labor and Personnel Economics

Master 2020/2021

Category 'Best Course for Career Development'

Category 'Best Course for Broadening Horizons and Diversity of Knowledge and Skills'

Category 'Best Course for New Knowledge and Skills'

Type: Elective course (Applied Economics)

Area of studies: Economics

Delivered by: Department of Applied Economics

Where: Faculty of Economic Sciences

When: 1 year, 4 module

Mode of studies: offline

Open to: students of one campus

Instructors: Olga Lazareva, Sergey Solntsev

Master’s programme: Applied Economics

Language: English

ECTS credits: 3

Contact hours: 36

Full Syllabus Ask Question

Abstract

The course covers main concepts and discusses recent advances in Labor and Personnel Economics, with an emphasis on the interaction between theory and empirics. We will discuss theoretical and empirical methods applied in this field of economics. The course is appropriate for graduate students with basic knowledge of microeconomic theory and econometrics. The course starts by discussing principles of the labor market analyses and the labor market flows. It proceeds to cover theories of labor supply and demand, and economic research analyzing human capital accumulation and wage differences. The second part of the course - Personnel economics - covers various aspects of the relationship between employer and employees. The topics discussed include employee motivation, incentive contracts, career incentives, problems of searching, hiring and firing the employees, structure of compensation, human resource management practices. The aim of this course is not only to provide a comprehensive discussion of the current state of research in the fields of Labor and Personnel Economics, but also to show students how to apply the skills acquired in microeconomic theory and econometrics courses to real-world topics. Labor and Personnel economics is a dynamic area of modern economics. It combines ideas and methods from a number of fields, including microeconomics, contract theory, micro-econometrics, behavioral and experimental economics. We will be using a couple of textbooks but the course material is primarily based on recent research papers published in leading economics journals.

Learning Objectives

The aim of this course is not only to provide a comprehensive discussion of the status of research in the field of Labor and Personnel Economics, but also to endow students to apply the skills acquired in microeconomic theory and econometrics courses to real-world topics.

Expected Learning Outcomes

analyze active labor market programs
estimate unemployment rate and duration
use labor demand model for labor market empirical analyses
use various labor supply models for labor market empirical analyses
identify data for research in labor economics
analyze labor market flow using labor statistics
analyze trade-off between risk and incentives in contracts
use screening, signaling and self-selection models
analyze incentives of employees and employers for human capital investments
analyze human resource management practices in firms

Course Contents

Introduction to Labor Economics. Labor Structure
Labor market analyses. Labor market flows. Data collection.
Labor Supply
Labor supply trends. Labor supply models. Participation decision. Household production. Family models. Empirical estimation.
Labor Demand
Labor demand models (SR, LR). Cross-elasticity of demand. Empirical estimation.
Unemployment and Job Search
Unemployment duration. Job search model. Active labor market programs.
Employee productivity and incentive contracts
Unobserved effort and moral hazard problem. Incentive contracts. Explicit and implicit contracts. Optimal trade-off between risk and incentives in contracts. Career incentives and tournaments. Intrinsic motivation and behavioral aspects of incentives. The role of nonmonetary compensation.
Employee search, hiring and firing
Matching between firms and workers. Problem of asymmetry of information. Models of screening, signaling and self-selection. Costs of hiring and firing. Insider labor markets.
Human capital and employee training
Human capital investment after the formal education. Formal and informal employee on-the-job training. General and firm-specific training. Sources of financing of employee training. Incentives of firms to invest in employee human capital. Cross-country differences in employee training.
Human resource management practices in firms
Organizational practices: individual vs. team work. Incentives in teams and peer effects. Recent trends in human resource management practices. Complementarity among different HRM practices. Testing the efficiency of HRM practices in experiments.

Assessment Elements

Seminar Activity including Paper Review
Project Proposal
Exam
The Final Exam will consist of four essay questions. The topics for the questions for the final exam will cover material of program (lectures, seminars and articles). Exam will be in written form.

Interim Assessment

Interim assessment (4 module)
0.5 * Exam + 0.25 * Project Proposal + 0.25 * Seminar Activity including Paper Review

Bibliography

Recommended Core Bibliography

Card, D., & Ashenfelter, O. (2010). Handbook of Labor Economics. Amsterdam: North Holland. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=355581
Labor economics, Borjas, G. J., 2015
Mostly harmless econometrics : an empiricist's companion, Angrist, J. D., 2009

Recommended Additional Bibliography

Acemoglu, D., & Pischke, J.-S. (1998). Why Do Firms Train? Theory and Evidence. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.6FBBFC4
Anderson, P. M., & Brgess, S. M. (2000). Empirical Matching Functions: Estimation and Interpretation Using State-Level Data. Review of Economics & Statistics, 82(1), 93–102. https://doi.org/10.1162/003465300558669
Baker, G., Gibbs, M., & Holmstrom, B. (1994). The Internal Economics of the Firm: Evidence from Personnel Data. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.ADAEB47D
Becker, G. S. (1965). A Theory of the Allocation of Time. Economic Journal, 75(299), 493–517. https://doi.org/10.2307/2228949
Blau, F. D., & Kahn, L. M. (2007). Changes in the Labor Supply Behavior of Married Women: 1980——2000. Journal of Labor Economics, 25(3), 393–438. https://doi.org/10.1086/513416
Camerer, C., Babcock, L., Loewenstein, G., & Thaler, R. (1997). Labor Supply of New York City Cabdrivers: One Day at a Time. Quarterly Journal of Economics, 112(2), 407–441. https://doi.org/10.1162/003355397555244
Canice Prendergast. (1999). The provision of incentives in firms. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.9B3A09C0
Card, D., & Krueger, A. B. (1994). Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania. American Economic Review, 84(4), 772–793. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=bsu&AN=9410250161
Casey Ichniowski, & Kathryn Shaw. (2003). Beyond Incentive Pay: Insiders’ Estimates of the Value of Complementary Human Resource Management Practices. Journal of Economic Perspectives, 1, 155. https://doi.org/10.1257/089533003321164994
Crépon, B., Duflo, E., Gurgand, M., Rathelot, R., & Zamora, P. (2013). Do Labor Market Policies have Displacement Effects? Evidence from a Clustered Randomized Experiment*. Quarterly Journal of Economics, 128(2), 531–580. https://doi.org/10.1093/qje/qjt001
Dube, A., Lester, T. W., & Reich, M. (2010). Minimum Wage Effects across State Borders: Estimates Using Contiguous Counties. Review of Economics & Statistics, 92(4), 945–964. https://doi.org/10.1162/REST_a_00039
Edward P. Lazear, & Paul Oyer. (2003). Internal and External Labor Markets: A Personnel Economics Approach. NBER Working Papers.
Gronau, R. (1977). Leisure, Home Production, and Work——the Theory of the Allocation of Time Revisited. Journal of Political Economy, 85(6), 1099. https://doi.org/10.1086/260629
Ichniowski, C., & Shaw, K. (1997). The Effects of Human Resource Management Practices on Productivity: A Study of Steel Finishing Lines. American Economic Review, 87(3), 291–313.
Jacob Mincer. (1962). On-the-Job Training: Costs, Returns, and Some Implications. NBER Chapters, 50.
Konings, J., & Lehmann, H. (2002). Marshall and Labor Demand in Russia: Going Back to Basics. Journal of Comparative Economics, (1), 134. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.a.eee.jcecon.v30y2002i1p134.159
Labor economics, Cahuc, P., 2004
Lazear, E. P. (1990). Job Security Provisions and Employment. https://doi.org/10.2307/2937895
Neumark, D., & Wascher, W. (2000). Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Comment. American Economic Review, 90(5), 1362–1396. https://doi.org/10.1257/aer.90.5.1362
Nicholas Bloom, & John Van Reenen. (2010). Why Do Management Practices Differ across Firms and Countries? Journal of Economic Perspectives, 1, 203. https://doi.org/10.1257/jep.24.1.203
Nickell, S. (1997). Unemployment and Labor Market Rigidities: Europe versus North America. Journal of Economic Perspectives, 11(3), 55–74. https://doi.org/10.1257/jep.11.3.55
Paul Oyer, & Scott Schaefer. (2010). Personnel Economics: Hiring and Incentives. NBER Working Papers.
Unemployment dynamics and duration dependence. (1996). Journal of Labor Economics, 14, 100–125. https://doi.org/10.1086/209805

Course Syllabus