Courses:

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The course outline below provides a list of topics.

This is the second of a two-part sequence of courses in labor economics. This sequence is designed to prepare graduate students for general examinations in the field of labor economics in the Department of Economics and in the Sloan School of Management. The course sequence is also open to qualified students in related fields and classes may be taken individually or out of sequence. This part of the sequence is principally concerned with issues relating to the determinants of the wage and salary distribution. The first half (taught by Steve Pischke) is organized around topics in wage determination, which are of particular interest for current research and policy and culminates with a focus on recent debates about the increasing dispersion of wage and salary income. The second half of the course (taught by Michael Piore) is focused on labor market institutions and technological changes, and relates the debate about the income distribution to other major changes in the structure and texture of advanced industrial societies which have accompanied the widening dispersion of income. The emphasis is on the United States and other advanced industrial countries, with some discussion of the relevance of the theory and analysis to developing economies.

Students who are planning on becoming labor economists are encouraged to invest in all five volumes of the Handbook of Labor Economics (Elsevier Science).

Ashenfelter, Orley, P. R. G. Layard, and David E. Card, eds. Handbook of Labor Economics. Vols. 1, 2, 3A, 3B, and 3C. New York, NY: Elsevier, 1986-1999. ISBN: 9780444878564 (vol. 1), 9780444878571 (vol. 2), 9780444501875 (vol. 3A), 9780444501882 (vol. 3B), 9780444501899 (vol. 3C).

There will be a number of problem sets, two short essay assignments, and a final exam. All students must attend class regularly and contribute to discussions. Students taking the Labor General must also take the Final Exam. Late assignments and incompletes will not be accepted - you must complete all class requirements this spring.

For any use or distribution of these materials, please cite as follows:

Michael Piore, Steve Pischke, Jin Li, course materials for 14.662 Labor Economics II, Spring 2007. MIT OpenCourseWare (http://ocw.mit.edu/), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].

1. Moral hazard and agency
   • Static single agent models
   • Intrinsic motivation
   • Multiple tasks
   • Multiple agents
   • Dynamic agency
   • Efficiency wages
2. Employer wage differentials
   • Industry and firm size differentials
   • Compensating differentials
3. Discrimination and differentials by race and gender
4. Changes in the wage structure and inequality
   • The facts
   • Explanations: Supply and demand for skills
   • Skill biased technical and organizational change
   • International trade and immigration
   • Labor market institutions and wage compression
   • International evidence

1. Introduction and overview
2. Worker motivation and behavior
3. Technology, job characteristics, and structure
4. The social dimensions of the labor force
   • Social class
   • Social capital
   • Identity
   • Special topics
     • Networks
     • Immigration
5. Institutions
   • General
   • Trade unions
   • Quasi-unions in the new labor market
   • Labor market institutions in the new economy
   • International comparison
   • Labor market regulations in a global economy