Institute of Economics
520 G
Labour Economics
Prof. Dr. Thomas Beißinger

Team
Prof. Dr. Thomas Beißinger
Chair of Labour and Service Economics
Lectures in:
 Labour Economics 1: Topics in Advanced Labour Economics
 Labour Economics 2: Labour Markets and the Macroeconomy
Supervision of seminar papers and master theses
Martyna Marczak
Research assistant
Tutorials in:
 Labour Economics 1: Topics in Advanced Labour Economics
 Labour Economics 2: Labour Markets and the Macroeconomy
Supervision of seminar papers and master theses
 TEAM  OBJECTIVES  LABOUR ECONOMICS 1 LABOUR ECONOMICS 2  SEMINAR 
Objectives of the module
 An application of microeconomics, macroeconomics and econometrics to labour market issues
 The module creates a strong link to the recent research in the field of labour economics
 Students acquire the ability to understand and interpret labour market models and empirical
approaches in labour economics.
 The curriculum combines the analysis of theoretical concepts with the possibility of an empirical
application in the seminar papers or master theses
 „Labour Economics“ is an ideal complement to such courses as: „Money and Employment“,
„International Trade“, „Public Finance“ and „Econometrics“
 TEAM  OBJECTIVES  LABOUR ECONOMICS 1 LABOUR ECONOMICS 2  SEMINAR 
Labour Economics 1: Topics in Advanced Labour Economics
1. The Theory of Labour Supply
 The basic model: budget constraint; preferences; analysis of the labour supply decision; labour
market participation; reservation wage; supplied working hours
 Effect of unemployment insurance, taxes or wage subsidies on labour supply
 Extensions: household production, family models and intertemporal labour supply
2. The Econometrics of Labour Supply
 Ingredients of a labour supply equation
 Guide to estimating labour supply
 Measurement problems
 Nonlinear budget constraints
 Natural experiments
 TEAM  OBJECTIVES  LABOUR ECONOMICS 1  LABOUR ECONOMICS 2  SEMINAR 
Labour Economics 1: Topics in Advanced Labour Economics (cont´d)
3. Job Search

Basic job search theory: search process and reservation wage; comparative statics of the
basic model; choice among nonparticipation, job-seeking and employment

Extensions: eligibility and unemployment; on-the-job-search; endogeneous search effort
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The equilibrium search model and the theory of optimal unemployment insurance

Empirical aspects of job search: hazard function; measuring unemployment insurance benefits;
the determinants of unemployment duration
Literature: Cahuc, P., and Zylberberg, A. (2004), Labor Economics, MIT Press, Chapters 1 and 3
Type of examination: written exam
Points: 6 EP
 TEAM  OBJECTIVES  LABOUR ECONOMICS 1  LABOUR ECONOMICS 2  SEMINAR 
Labour Economics 2: Labour Markets and the Macroeconomy
1. Job Reallocations and Unemployment
 Empirical evidence on job flows and worker flows
 The matching model: the matching function; the Beveridge curve; behaviour of firms; behaviour of
workers; labour market equilibrium; out-of-stationary-state dynamics
2. Labour Unions
 Utility function and behaviour of labour unions
 General equilibrium: explanation of unemployment
 Extensions: Nash bargaining; the impact of taxes on collective bargaining
 Degree of centralization of wage bargaining: the Calmfors-Driffill hypothesis
 Insiders and Outsiders: insiders and the persistence of unemployment; labour market segmentation
 Empirical evidence regarding the consequences of collective bargaining
 TEAM  OBJECTIVES  LABOUR ECONOMICS 1 LABOUR ECONOMICS 2  SEMINAR 
Labour Economics 2: Labour Markets and the Macroeconomy (cont´d)
3. Efficiency Wages
 Partial equilibrium: a simple model
 The causes of efficiency wages
 Empirical evidence
 Efficiency wages in a macroeconomic framework: explanation of involuntary unemployment
Literature:
•
Cahuc P., and Zylberberg A. (2004), ), Labor Economics, MIT Press, Chapter 9; some parts of Chapter 7
•
Sorensen P. B., and Whitta-Jacobsen, H. (2005), Introducing Advanced Macroeconomics,
Chapters 12 and 13
Type of examination: written exam
Points: 6 EP
 TEAM  OBJECTIVES  LABOUR ECONOMICS 1  LABOUR ECONOMICS 2  SEMINAR 
Seminar
Examples of topics in previous seminars and master theses:
•
Adverse selection and the labour market
•
Efficiency wages and dual labour markets
•
The relationship between inequality and economic growth
•
Optimal contracting and CEO compensation
•
The labour market consequences of immigration: theory and empirical evidence for Germany
•
Health, health insurance and the labour market
•
The economic analysis of labour market discrimination
Participants are also encouraged to make their own suggestions on the preferred topic, upon consultation
with the supervisor
Schedule: presentations take place as a block seminar
Points: 6 EP
 TEAM  OBJECTIVES  LABOUR ECONOMICS 1  LABOUR ECONOMICS 2  SEMINAR 