Labour Economics

The course aims to present modern economic theory of labor markets with applications to labor market policy. Labor economics is the study of the labor market from an economic perspective. Students learn to analyze how the interactions of the labor market agents, such as individuals, firms, organizations, and government, determines labor market participation, employment and unemployment, as well as wages and other aspects of labor contracts. Labor supply and demand is studied, with applications to labor market participation, employment and working hours. A flow perspective of the labor market is applied to the analysis of job creation and destruction, job search and the matching of workers with vacant jobs. Various theories of wage determination are studied, e.g. compensating differences, human capital, and individual and centralized wage bargaining. The determinants of unemployment are treated from the perspectives of labor market friction, as in the theory of search and matching, and of wage formation, as in the theories of unions and efficiency wages. These theories are applied to questions of labor market policy.