Duration: 3 hours per week - 13 weeks [ECTS: 6]

Course description

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 This course aims to familiarize students with the basic principles and methods of Labor Economics. By the end of the semester students should have a deep understanding of the functioning of the labor market (supply and demand), Human Capital Theory, migration theories, the role and effects of labor unions in the labor market, as well as unemployment and income inequalities.  The course also covers labor-market policy issues such as minimum-wage policy, unemployment benefits, and policies addressing income inequality. Topics covered in the lectures: 

1. Labor supply. Workers’ preferences. Income and substitution effects. Reservation wage. Determinants of individual labor supply. 

2. Specific policy topics: Taxation and labor supply. Welfare programs and labor supply. Life-cycle labor supply (retirement, economic fluctuations). Household production function. Fertility.

3. Labor demand. Profit maximization. Substitution and scale effects. Marshallian rules for derived demand. 

4. Labor-market equilibrium. Competitive equilibrium. Determination of wages and employment under different market forms. Taxes and employment subsidies. The search (matching) model. Noncompetitive labor markets. Minimum wage. 

5. Human capital theory. Ability discrimination. Specific and general training. Mincer earnings function. Wage differentials. 

6. Labor mobility. The migration decision. The Roy model. Effects of migration on the labor market. Case study: Greece. 

7. Unemployment. Types of unemployment. Steady-state unemployment rate. Unemployment benefits. Temporary layoffs. Intertemporal substitution hypothesis. Efficiency wages. Implicit contracts. Phillips curve. 

8. Income distribution. Inequality.

Learning outcomes

By the end of the lectures, students should be able to:  

• Understand the basic principles of Labor Economics theory, including the different structures observed in labor markets and wage determination.  
• Analyze and critically discuss theoretical and empirical models in Labor Economics. 
• Understand and be able to critically interpret policy proposals related to the labor market.