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INDEPENDENT UNIVERSITY, BANGLADESH Department of Economics School of Business

Semester Spring 2014 Course Code ECN 351 Course Title Labor Economics Section 1

Instructor : Tapas Kumar Paul Office : 3001 Phone : 01552 475 309 (not preferred) Email : paulju16@gmail.com; tapaspaul@iub.edu.bd

Class Time: MW 11:20 - 12:50 PM; Class Room: BC4010 Office Hours: ST: 8:00 - 9:30 AM & 1:00 - 3:00 PM
MW: 8:00 - 11:00 AM; TR: 9:00 - 11:00 AM

Course website: www.ecn351tapas.blogspot.com Blog: http://tapaspaulecon.blogspot.com/

COURSE DESCRIPTION: This course focuses on theoretical and empirical analyses of investment in human capital, and wage and employment determination. Topics include labor supply and demand, education, peer effects, income inequality, intergenerational mobility, discrimination, crime, and immigration. By the end of the course, students should have a basic familiarity with the stylized facts and institutions of the labor market and will be able to understand the theoretical and empirical tools used in labor economics, which, in turn, can be applied to the study of virtually any public policy issue. PREREQUISITE: ECN 301: Intermediate Microeconomic Theory. A basic course in mathematics, statistics and/or econometrics will be helpful in understanding the material, but is not required. TEXT BOOK: Required: George J. Borjas, Labor Economics, 6th edition, McGraw-Hill, 2013. There are also supplemental readings that are available on the course website. There will be some additional short readings handed out in class. Optional: Ronald G. Ehrenberg and Robert S. Smith, Modern Labor Economics: Theory and Public Policy, 11th edition, Pearson, 2011. This textbook covers the same material as the Borjas textbook and has additional study questions with answers. 1

COURSE OBJECTIVES: Should I study for my Economics? Why do employers pay equally qualified people different wages according to irrelevant characteristics? Does the minimum wage alleviate poverty and/or unemployment? Should the government provide unemployment insurance? What is the impact of employment generation scheme and others in Bangladesh? Why has the gap between high and low earners increased so much in recent decades? These types of question are only answerable with reference to labor economics. The objective of this course is to provide a comprehensive and coherent view of the labor market so that students can take an informed perspective on the issues raised by these questions and many more. COURSE OUTLINE: This outline represents the order of topics to be covered in this course. However, some topics will receive more attention in lectures than others. Moreover, I have the right to make addition or deletion of topics, if required.
Text/ Reference Borjas: Chapter 1 Lecture No. Lecture no. 1

Sl.

Topics, Articles, Papers Introduction to Labor Economics: (Appendix)

1 *Paul Krugman, There Is No True Unemployment Rate, The New York Times, July 14, 2013
*The Hidden Cost of Young Adult Unemployment, Young Invincible, January, 2014

Labor Supply:
*Alan Krueger, Why Tax Cuts Will Not Pay Off, The New York Times, June 26, 2003 *Alan Krueger, Study Looks at Squatters and Land Titles in Peru , The New York Times, January 9, 2003 *James Surowiecki, Leave No Parent Behind, The New Yorker, August 11, 2003 *Fehr, Ernst, and Lorenz Goette. "Do Workers Work More if Wages are High? Evidence from a Randomized Field Experiment." American Economic Review 97, no. 1 (March 2007): 298-317.

Borjas: Chapter 2

Lecture no. 2, 3

Labor Demand: *Daniel Gross, Self-Depreciating Remarks, Slate, September 7, 2004 Borjas: Lecture 3 *Farber, H., 2007, "Job Loss and the Decline in Job Security in the United States", Chapter 3 no. 4, 5 Princeton University Industrial Relations Section, Working Paper no. 520 4 Class Test # 1 Lecture no. 6 Labor Market Equilibrium:
5 *Steven Landsburg, The Sin of Wages Slate, July 9, 2004 *"Minimum wages: The logical floor," The Economist, December 14, 2013

Borjas: Chapter 4 Borjas: Chapter 5 Borjas: Chapter 6

Lecture no. 7, 8 Lecture no. 9 Lecture no. 10, 11

Compensating Wage Differentials: *Steven Landsburg, Is Your Life Worth $10 Million? Slate, March 3, 2003 Human Capital: 7 * "How Convincing is the Evidence Linking Education and Income?" Labour Economics and Productivity, vol. 6, (1994): 1-12. 6

8 Class Test # 2 The Wage Structure: * Rushidan, Rahman. "Determinants of Wage Employment and Labor Supply in the Labor Surplus Situation of Rural Bangladesh." The Bangladesh Development Studies, v.21(2), 1993. 9 *Krueger, Alan, "Inequality, Too Much of a Good Thing," Working Paper #87, Princeton University, April 2002. *Alexander Stille, Grounded by an Income Gap, The New York Times, December 15, 2001 10 Midterm: Labor Mobility: 11 *Borjas, George, Reframing the Immigration Debate, Chapter 1 in Heavens Door: Immigration Policy and the American Economy, Princeton University Press, 1999 Labor Market Discrimination: Heckman, James, and Brook Payner. "Determining the Impact of Federal 13 Antidiscrimination Policy on the Economic Status of Blacks: A Study of South Carolina." American Economic Review 79, no. 1 (1989): 138-177. Labor Unions: 14 Farber, Henry. "Analysis of Union Behavior." NBER paper no. 1502 15 Class Test # 3 Incentive Pay: 16 H. Lorne Carmichael and W. Bentley MacLeod, Worker Cooperation and the Ratchet Effect, Journal of Labor Economics18 (January 2000): 119. Unemployment:
Ashenfelter, Orley. "What is Involuntary Unemployment?" Proceedings of the American Philosophical Society 122, no. 3 (June 1978): 135-138. Woodbury, Stephen A., and Robert G. Spiegelman. "Bonuses to Workers and Employers to Reduce Unemployment: Randomized Trials in Illinois." American Economic Review 77, no. 4 (September 1987): 513-530.

Lecture no. 12

Borjas: Chapter 7

Lecture no. 13

Lecture no. 14 Borjas: Chapter 8 Borjas: Chapter 9 Lecture no. 15, 16 Lecture no. 17, 18

Borjas: Lecture Chapter 10 no. 19, 20 Lecture no. 21 Borjas: Chapter 11 Lecture no. 22, 23

17

Borjas: Chapter 12

Lecture no. 24

Farber, Henry S. "Is Tomorrow Another Day? The Labor Supply of New York City Cabdrivers." Journal of Political Economy 113, no. 1 (2005): 46-82. 18 Final Exam

COURSE EVALUATION: Type of Evaluation Class Attendance Class Discussion Weekly Homework Class Test Midterm Exam Final Exam Total 3 Weight 5% 10% 10% 25% 25% 25% 100%

GRADING POLICY: The following scheme should be followed in assigning final grade for the course: Grade A AB+ B BC+ Percentage 90 and above 85 to less than 90 80 to less than 85 75 to less than 80 70 to less than 75 65 to less than 70 Grade C CD+ D F Percentage 60 to less than 65 55 to less than 60 50 to less than 55 45 to less than 50 Less than 45

COURSE POLICY Students are also expected to exhibit proper classroom behavior. Students should always respect other peoples opinions during class discussions. Homework: I will be assigning homework almost every week. Most of the homework will not be graded, but you are strongly encouraged to do it to practice the methods learned in class and to verify your understanding of the material. Some of the homework, usually assigned every other week, will count toward your grade and will need to be turned in typically the second lecture after it was assigned. To encourage you to do all of the homework, I will choose at least one question to be included on each test and exam from the homework assignment (the numbers might be different). You are free to discuss the homework with your classmates, but I strongly encourage you to understand the solution yourself. Do not assume you understand something just because someone told you how to do it. Try to work homework in a group. I suggest you to form a group consist of 3 to 5 students. You do need to turn in your own solution. Remember that no collaboration will be allowed during in-class tests and exams. Please return the homework with your name and the section you are in on the upper right corner of cover page. The homework is due on the due date at the beginning of class. You will receive full credit only on homework returned on time on the due date. You can return the homework up to a week late, but you will receive only half credit for it. Attendance: You are required to attend all class sessions and actively participate in class discussions. You are also required to come to the class on time and stay for the entire period. I will end the class on time and before that will give you a brief overview. Make up tests (only class test) will be given only if you present written evidence, as soon as possible, that you did (or will have to) miss an exam for a legitimate reason, e.g. illness or family emergency. A note that you have visited hospital is not proof of a 4

legitimate reason. Travel and leisure plans are not a legitimate reason. There will be NO make-up exam for midterm or final.

SUGGESTIONS FOR SUCCESS IN THE COURSE: Please come to class prepared. This does not mean you have to understand everything. In fact, if you don't understand something you will have the opportunity to ask about it and we can discuss it in class. Please let me know if you are having trouble with something, and do so before it becomes an issue on a test or exam. Do make use of office hours. Please send an email for appointments. While reading the textbook I strongly encourage you to work in a group through the exercises and examples. This is a very useful way to increase your understanding of the material. After reading something, try to summarize the important concepts. This will help create a mental framework into which to the problems you will be working on. I have setup an anonymous feedback page on the website. Please use it to improve the class. The link is available in my blog and your course website too. INCOMPLETE (I) GRADE: Awarding of Incomplete or I grades should be strongly discouraged. I will only be allowed for students who have a valid reason (ascertained by the senior management). In situations where the student is unable to complete the course due to unanticipated illness or family emergency and has not attended at least 75% of the classes held, he / she will be asked to withdraw from that course and repeat it. In unavoidable circumstances where students have completed 75% of the classes but are unable to continue (due to illness or family emergency), Incomplete grade of I may be granted. Incomplete course has to be completed by the end of the next semester, otherwise grade I automatically becomes grade F. The student is not required to register for the course in the next semester. WITHDRAWAL (W): A W grade means withdrawal. A student may decide to withdraw from a course by the deadline. Students must apply to the Program Office for withdrawal from a course with the permission of the concerned course instructor, Academic Advisor, and the

Dean. Withdrawal from only one course in a semester is allowed but the students should provide valid reason along with documents while applying for the withdrawal.

AUTOMATIC WITHDRAWAL: A student can misses a maximum of 8 classes for a particular course. After that the course will be automatically withdrawn.

ACADEMIC INTEGRITY POLICY: I will strongly follow the code of conduct delivered by IUB. Any student acting otherwise will receive an F in the course. School of Business, IUB, maintains a zero tolerance policy regarding violation of academic integrity. MISCELLANEOUS RULES: Electronic Devices: Turn off your ringing tone in your cell phone and whatever else you have that makes noise. Its disrespectful and distracting. .