Labor Economics Summer School

Four lectures given over five sessions explore both the demand for education and the supply of education. The supply lecture will cover most of the important policy debates in modern economies concerning the K-12 education policy. The course will draw on a number of outside readings and a set of draft chapters from a book I am writing.

Course Outline

1. Human Capital Models
The first lecture explores models of the demand for education that treat education as a vehicle for building human capacity. Ben Porath (1967), Cuhna and Heckman (2007), Neal (2014) - Chapter 1

2. Empirical Impacts of Education
The second lecture explores the literature on the causal impact of education on life outcomes. At the end of the lecture, we briefly review the Spence signaling model and discuss evidence that separates human capital and signaling explanations for observed casual impacts of schooling on employment and earnings. Card (2000), Clark and Martorell (2013), Chetty et al (2010), Heckman, Lochner, and Todd (2008), Neal (2014) - Chapter 2

3. Human Capital Spillovers
The third lecture examines the theoretical and empirical literature on human capital spillovers. A large literature grows out of Lucas (1988) that discusses the extent to which the education and skills of one agent impact the productivity of other agents and the extent to which these external effects are priced in the labor market. Readings include Bill and Klenow (2000), Hanushek and Woessmann (2012), Barro and Lee (2010), Moretti (2004).

4. Mechanism Design and the Public Funding of Education
During the first three lectures, we discuss several different rationals for public funding of education. In this final lecture, we discuss three different paradigms for using public funds to acquire education services for children. (i) Public Provision within Government Accountability Systems, (ii) Voucher Systems, and (iii) Blended Systems that combine (i) and (ii). This lecture is based largely on Neal (2012) and Neal (2009), but the lecture will also include a review of the recent literature on charter schools.

About the Instructor

Derek Neal is a Professor in the Department of Economics and the Committee on Education at the University of Chicago. Professor Nealʼs current research focuses on the design of incentive systems for educators. His work explores the design flaws in current performance pay and accountability systems and also highlights the advantages of providing incentives through contests between schools.

Earlier in his career, his research focused on the causes and consequences of measured skill gaps between blacks and whites in the United States. He has also written a number of papers on the specificity of worker skills and the implications of the idea that workers possess many skills that are neither completely general or entirely specific to one firm but rather specific to a career.

He is a past President of the Midwest Economics Association, a Fellow of the Society of Labor Economists, former Editor-in-Chief of the Journal of Labor Economics and a current editor of the Journal of Political Economy.

Overview

This course explores the determination of labor market outcomes, with a particular focus on the determination of the unemployment rate and the flow of workers between employment and unemployment.  Throughout the course we will use economic theory to motivate a careful analysis of relevant data sources.

Course Outline

1. Unemployment and labor market flows: decomposition of hours worked; measurement of the job finding and separation rates; and the gross flow of workers between employment, unemployment, and out of the labor force. 
2. Duration dependence in the job finding rate: gross flows at different frequencies, distinguishing between structural duration dependence and heterogeneity; and the role of unemployment benefits. 
3. Business Cycle Fluctuations: job vacancies and the matching function; the labor wedge 
4. Basic search model: linear preferences and linear production technology.  Quantitative evaluation of the model’s performance.  The role of the “value of leisure.” 
5. Nonlinear search model: finite intertemporal elasticity of substitution in consumption; capital; search intensity; wage rigidities

About the Instructor

Robert Shimer is the Alvin H. Baum Professor in Economics at the University of Chicago.  Prior to joining the Chicago faculty in 2003, he received his Ph.D. at M.I.T. and taught at Princeton University.  He is a consultant at the Federal Reserve Banks of Atlanta, Chicago, and Minneapolis, a Research Associate in the National Bureau of Economic Research, a Fellow of the Econometric Society and the Society of Labor Economists, and a Member of the American Academy of Arts and Sciences.  He is a co-chair of the NBER Economic Fluctuations and Growth “Macro Perspectives” group, and served as editor of the Journal of Political Economy from 2004 to 2012. 

Prof. Shimer’s research lies in the intersection between macroeconomics and labor economics. He has focused on search frictions and on the mismatch between workers’ human capital and geographic location and the skill requirements and location of available jobs. He is the author of the book Labor Markets and Business Cycles and has published in many leading journals, including the American Economic Review, Econometrica, the Journal of Political Economy, the Quarterly Journal of Economics, the Review of Economic Studies, the Journal of Economic Literature, and the American Economic Journal: Macroeconomics.

Course Overview

Men earn on average higher wages than women. Men and women concentrate in different occupations, and women are under-represented in the political sphere and high-powered occupations. Women attain on average higher levels of schooling than men, and they take on a higher share of household chores and childcare.

Why these differences? Do they represent a problem? Should families, schools, firms or governments do something about it? This course will provide you with an overview of a recent literature in economics that documents gender gaps in a range of domains, tries to uncover the factors that drive them, and evaluates the effectiveness of different policies in mitigating them.

Course Outline

Some of the main topics that we will cover include:

1. Gender gaps in wages and employment
2. Gender and education
3. Risk aversion, competitiveness, and other traits.
4. Family (contraception, fertility, abortion, marriage and divorce, household specialization)
5. Gender and public policy

About the Instructor

Libertad González is a professor of Economics at Universitat Pompeu Fabra and the Barcelona GSE. She holds a PhD in Economics from Northwestern University, and has been a visiting scholar at Columbia University and Boston University. Her research lies in the areas of Labor, Public, and Health Economics. She has worked on topics that include the economic effects of immigration, and the effects of public policy on fertility, female labor supply, and child health. She has published in journals such as the American Economic Journal: Economic Policy, the Journal of Human Resources, the European Economic Review, the Journal of Applied Econometrics, Labor Economics, etc.

Overview

In the world, more than 220 million individuals live in a country different from that of birth. In developed countries, foreign born individuals represent 10.5% of the population. This important factor reallocation is the result of decades of increasing globalization of labor markets. Why people migrate, who migrates where, and what are the economic impacts for the receiving economy, are important questions that have motivated a huge body of research in Economics.

The main objective of this course is to explore the different answers provided in the literature to these questions. We will start focusing on migration decisions. Understanding the motivations to migrate is important to analyze who migrates to each location. Hence, we will explore the theoretical grounds for this type of decision starting from the Roy model, and its seminal implementation in the migration context by Borjas (1987), and then we will review some empirical literature. From a very different angle, recent work in the last few years has estimated structural models of internal migration (Gould, 2007; Kennan and Walker, 2011; Buchinsky et al, 2014 among others). Internal migration decisions have specific idiosyncrasies that make worthy their analysis in a separate way. We will devote important emphasis on migration costs, available information, and the effect of internal migration in shaping local labor markets.

The second part of the course will focus on labor market impacts of immigration. First we will explore the literature that has analyzed the impact of immigration across local labor markets. Later, we will review the literature that studies labor market impacts of immigration at the national level. All these approaches are well detailed in Borjas (2014). Two important difficulties to overcome in both cases are endogeneity of immigrant inflows and adjustments by natives, previous immigrants, and/or prospective migrants. Finally, we will study the assimilation process of immigrants in the labor market.

Course Outline

Part I: Migration Decisions

1. International migration decisions
   1. Migration Decisions
   2. Immigration Selection: The Roy Model
   3. Empirical Evidence
2. Structural estimation of models of internal migration

Part II: Economic consequences of immigration

1. Wage effects of immigration
   1. Effects on local labor markets
   2. National level approaches
2. Assimilation of immigrants

About the Instructor

Joan Llull is a Research Fellow at MOVE (Markets, Organizations and Votes in Economics), Assistant Professor at Universitat Autònoma de Barcelona, and Affiliated Professor at the Barcelona Graduate School of Economics. He received his PhD in Economics from CEMFI in 2011, and he joined MOVE, Autònoma de Barcelona, and Barcelona GSE afterwards. He is also an external fellow of the Center for Research and Analysis of Migration (CReAM) from the University College London, and a member of the INSIDE network.

Professor Llull's research focuses on analyzing the causes, consequences, and implications of international and internal migrations, as well as on the analysis of family formation, household structure, and health. His research uses different state-of-the-art econometric techniques, ranging from the estimation of rich equilibrium dynamic discrete choice structural models, to the proposition of novel identification strategies combining different samples is the estimation of parameters of interest from a reduced form of an economic model.