Econ 8503 Graduate Labor Economics

Syllabus under preparation

Spring 2005
Department of Economics, University of Minnesota

Time: Tu-Th 9:45-11:25
Location: ??
Instructor: Andrea Moro
Office: 947 Heller Hall
Phone: 625 8369
Hours: by appointment
E-mail: amoro@econ.umn.edu
Home: http://www.econ.umn.edu/~amoro/Teaching/gradlaborsyl.html

Overview

The goal of the course is to provide students with examples of frontier research in economics. Hopefully, this will allow students to (a) understand what economics as a social science intends to accomplish (b) distinguish between good and bad economics (c) find a dissertation idea. I will accomplish my objective by illustrating a few topics I am interested in. I will mainly cover the theory and estimation of human capital models. Theory and Empirical research will receive approximately the same class time, unless there is a strong preference for a different allocation among students.

I will focus on (1) different theories of labor market discrimination, based on taste, human capital, signaling and search frictions, and on (2) the empirical and theoretical debate regarding human capital vs signaling explanations for labor market differentials. This will give me a chance to focus on the rather esoteric yet fascinating topic of (3) estimating models with multiple equilibria. We will also cover (4) the effects of policies such as affirmative action and racial profiling.

Assignments and grading policies

Students will be required to complete a couple of problem sets, give an in-class presentation and of a paper from a list that I will provide and write referee reports on the papers presented in class.

Outline

1. Theories of Discrimination
   1. Taste discrimination:
      • Becker, G. The Economics of Discrimination, 1957
   2. Statistical theories based on informational imperfection: Phelps, Aigner and Cain:
      • Phelps, Edmund S., "The Statistical Theory of Racism and Sexism,'' American Economic Review (September 1972), 659-61.
      • Aigner, Dennis J. and Glen, G. Cain, "Statistical Theories of Discrimination in Labor Market,'' Industrial and Labor Relations Review, 30, 1977, pp. 749-76.
   3. Educational Signaling:
      • Spence, M. "Job Market Signaling" Quarterly Journal of Economics 87, 1973, 355-375
   4. Statistical theories based on human capital:
      • Coate, Stephen and Glenn C. Loury, "Will Affirmative-Action Policies Eliminate Negative Stereotypes?, American Economic Review 83, December 1993, 1220-40.
      • Moro, A. and P. Norman, "A General Equilibrium Model of Statistical Discrimination", 2002
   5. Statistical theories based on search frictions:
      • Mailath, G., A. Shaked and L. Samuelson, "Endogenous Inequality in Integrated Labor Markets with Two-Sided Search," with Larry Samuelson and Avner Shaked, American Economic Review, 90 (March 2000), 46-72.
   6. Policy: Affirmative action and Racial Profiling
      • Additional readings:
        • Moro, Andrea and Peter Norman, ``Affirmative Action in a Competitive Economy'', Forthcoming, Journal of Public Economics, 2002
        • Persico, Nicola, Andrew Postlewaite and Dan Silverman, ``The Effect of Adolescent Experience on Labor Market Outcomes: The Case of Height'', mimeo, University of Pennsylvania, 2002.
   7. Dynamic Models:
      • Kate Antonovics
      • Fryer, Roland Jr. A Dynamic Theory of Statistical Discrimination, February 2003
2. The empirical evidence of discrimination
   • Moro, Andrea and Peter Norman, "Empirical Implications of Statistical Discrimination on the Returns to Measures of Skill", 2003
   • Moro, A "The Effect of Statistical Discrimination on Black-White Wage Inequality: Estimating a Model with Multiple Equilibria", 2003
   • Additional readings:
     • Antonovics, K. "Long-Run Racial Discrimination in a Competitive Economy: Estimating a Dynamic Model of Statistical Discrimination", 2000
     • Neal, Derek A. and William R. Johnson (1996), ``The Role of Premarket Factors in Black-White Wage Differentials'', Journal of Political Economy 104, 869-895.
3. The estimation of models with multiple equilibria
   • Bisin, Moro and Topa: "The empirical implications of models with multiple equilibria"
   • Aguirregabiria, Victor and Pedro Mira: "Sequential Simulated-Based Estimation of Dynamic Discrete Games", mimeo, July 2002
   • Additional readings:
     • Tamer, Elie "Incomplete Simultaneous Discrete Response Model with Multiple Equilibria" Review of Economic Studies, 2002.
     • Bresnahan T. and Reiss P. "Empirical Models of Discrete Games" Journal of Econometrics1991, 57-81

Student presentations

Each student should pick a paper from this list and prepare transparencies for an in-class presentation. All students must write referee reports on all papers presented.

• Olivetti, Claudia: "Changes in Women’s Hours of Market Work: The Effect of Changing Returns to Experience", Boston University working paper, 2002.
• John Knowles & Nicola Persico & Petra Todd, 1999: "Racial Bias in Motor Vehicle Searches: Theory and Evidence," The Journal of Political Economy, 109(1) (February 2001), pp. 203-29.
• Persico, Nicola, Andrew Postlewaite and Dan Silverman, ``The Effect of Adolescent Experience on Labor Market Outcomes: The Case of Height'', mimeo, University of Pennsylvania, 2002.
• Jones, Larry, Rodolfo Manuelli, and Ellen McGrattan, "Why are married women working so much?", FRB Minneapolis staff report, May 2003
• Diermeier, Daniel, Michael Keane, and Antonio Merlo, "A Political Economy Model of Congressional Careers" Unpublished, 2002
• Dennis Epple, Michael Peress, and Holger Sieg, "Identification and Semiparametric Estimation of Equilibrium Models of Local Jurisdictions" unpublished, 2003
• Fang, Hanming, and Roland Fryer Jr. "The Optimal Timing of Affirmative Action", October 2003
• Fryer, Roland Jr. A Dynamic Theory of Statistical Discrimination, February 2003
• Fang, Hanming, "Government mandated discriminatory policies: theory and evidence"
• Fang, Hanming, "Disentangling the College Wage Premium: Estimating a Model with Endogenous Education Choices"
• Nagypal, Eva, "Learning by Doing vs. Learning about match quality: can we tell them apart?"
• Pastorino, Elena, "Career Dynamics Under Uncertainty: Estimating the Value of Firm Experimentation"
• Chaudhuri and Sethi "Statistical Discrimination with Neighborhood Effects: Can Integration Eliminate Negative Stereotypes"
  

Other readings

Related books::

• Gary Becker, The Economics of Discrimination, The University of Chicago Press, 1971
• Claudia Goldin, Understanding the Gender Gap, Cambridge University Press, 1990.
• Glenn Loury, The Anatomy of Racial Inequality, Harvard University Press (?) 2002
• Notes on estimation of models multiple equilibria