Labour Economics

Third year module

This course provides an introduction to labour economics and econometrics. We will seek an understanding of key labour market phenomena, both analytically and empirically. We will provide a foundation in modern labour economics methods in order to enable students to evaluate research in labour economics, and to use its insights in their analysis of labour market policies.

In the first semester this module will provide an introductory understanding of the basic techniques behind labour econometrics. This understanding will be achieved by studying past seminal articles in labour econometrics and assigning introductory econometric exercises. Two broad areas are studied. The first involves the determination of wages, estimated using least-squares techniques. The second involves the determination of emplyoment estimated using limited dependent variable techniques use a Probit and Logit. In the second half of the semester students will be assigned compluter practiccal exercises to be presented in class.

In the secon semester this module will provide an introduction to the theory of contemporary labout economics. The analytical tool of neoclassical economics are used to examine labour supply and demand, which, in turn will be used to develop an understanding of wage formation and employment levels in labour markets. The module concludes with an examination of sources of wage differentials, considering the effects of education, unions, discrimination, and compensating wage differentials.

Learning outcomes

Semester One: Interpret the output of linear and limited dependent variable regressions in relation to labour economics. This includes the interpretation of wage regressions and employment regressions. The student should also have knowledge of past research that has led to the development of labour econometrics. Though not formally assessed, the student should develop a basic knowledge of how to implement cross-sectional labour econometric techniques in practice.

Semester Two: Describe key characteristics of, and recent developments in, labour markets in modern economies. Apply basic optimisation techniques to solve stylised problems relating to labour markets. Critically evaluate empirical findings relating to major research areas such as labour supply, returns to education, unemployment.


3 hour written exam