14.64 | Fall 2009 | Undergraduate

Labor Economics and Public Policy


Required Text

[Borjas] = Borjas, George J. Labor Economics. 5th ed. Boston, MA: McGraw-Hill/Irwin, 2010. ISBN: 9780073511368.

This edition differs little from the 4th edition, which you may also use, though note changes in chapter and section numbers:

Borjas, George J. Labor Economics. 4th ed. Boston, MA: McGraw-Hill/Irwin, 2008. ISBN: 9780073402826.

Optional and Supplementary Readings


[Angrist and Krueger] = Angrist, Joshua, and Alan Krueger. “Empirical Strategies in Labor Economics.” Chapter 23 in The Handbook of Labor Economics. Vol. 3A. Edited by Orley C. Ashenfelter and David Card. San Diego, CA: Elsevier, Inc., 1999, pp. 1277-1366. ISBN: 9780444501875.

For a more advanced and detailed discussion than the Angrist and Krueger handbook chapter:

Angrist, Joshua, and Jörn-Steffen Pischke. Mostly Harmless Econometrics: An Empiricist’s Companion. Princeton, NJ: Princeton University Press, 2009. ISBN: 9780691120355.

Microeconomic Theory

For a price theory review:

[Nicholson and Snyder] = Nicholson, Walter, and Christopher Snyder. Microeconomic Theory: Basic Principles and Extensions. 10th ed. Mason, OH: Thomson/South-Western, 2008. ISBN: 9780324585070.

For a relatively advanced text in applied consumer theory, still one of my favorites:

[Deaton and Muellbauer] = Deaton, Angus, and John Muellbauer. Economics and Consumer Behavior. New York, NY: Cambridge University Press, 1980. ISBN: 9780521296762.

Labor Topics

For specialized discussion of family and gender issues (differs little from the 5th edition):

[Blau, et al.] = Blau, Francine D., Marianne A. Ferber, and Anne E. Winkler. The Economics of Women, Men, and Work. 6th ed. Upper Saddle River, NJ: Prentice-Hall, 2009. ISBN: 9780136084259.

[Lang] = Lang, Kevin. Poverty and Discrimination. Princeton, NJ: Princeton University Press, 2007. ISBN: 9780691119540.

Readings by Topic

Introduction: facts about employment and earnings; the supply and demand framework


Goldin, Claudia. “Labor Markets in the 20th Century.” National Bureau of Economic Research Historical Working Paper No. 58, June 1994. Also available as chapter 10 in Cambridge Economic History of the United States. Vol. 3. Edited by Stanley L. Engerman and Robert E. Gallman. New York, NY: Cambridge University Press, 2000, pp. 549-624. ISBN: 9780521553087.

[Borjas] chapter 1, including the Appendix; chapter 4.

Empirical methods: regression and differences-in-differences

[Angrist and Krueger] sections 1-2.2.2.

[Angrist and Krueger] section 2.4.

Application: do immigrants take jobs from natives?

Johnson, George E. “The Labor Market Effects of Immigrants.” Industrial and Labor Relations Review 33, no. 3 (April 1980): 331-341.

Card, David. “The Impact of the Mariel Boatlift on the Miami Labor Market.” Industrial and Labor Relations Review 43, no. 2 (January 1990): 245-257.

Labor supply


[Borjas] chapter 2.

[Nicholson and Snyder] chapters 2-5. (math and microeconomics review)

[Deaton and Muellbauer] chapters 1-4 and 11.

Application: welfare and earned income tax credit (EITC)

Moffitt, Robert. “Welfare Programs and Labor Supply.” Chapter 34 in The Handbook of Public Economics. Vol. IV. Edited by Alan J. Auerbach and Martin Feldstein. Amsterdam, The Netherlands: North-Holland, 2002, pp. 2394-2430. ISBN: 9780444823151.

Eissa, Nada, and Jeffrey B. Leibman. “Labor Supply Response to the Earned Income Tax Credit.” Quarterly Journal of Economics 111 (May 1996): 605-637.

Application: intertemporal substitution on the road and at the ballpark

[Borjas] section 12.6.

Fehr, Ernst, and Lorenz Goette. “Do Workers Work More if Wages are High? Evidence from a Randomized Field Experiment.” American Economic Review 97, no. 1 (March 2007): 298-317.

Oettinger, Gerald S. “An Empirical Analysis of the Daily Labor Supply of Stadium Vendors.” Journal of Political Economy 107, no. 2 (April 1999): 360-392.

Income effects on labor supply

Imbens, Guido W., Donald B. Rubin, and Bruce I. Sacerdote. “Estimating the Effect of Unearned Income on Labor Supply: Evidence from a Survey of Lottery Players.” American Economic Review 91, no. 4 (September 2001): 778-794.

Unemployment and unemployment insurance

[Borjas] chapter 12.

Ashenfelter, Orley. “What is Involuntary Unemployment?” Proceedings of the American Philosophical Society 122, no. 3 (June 1978): 135-138.

Meyer, Bruce D. “Unemployment Insurance and Unemployment Spells.” Econometrica 58, no. 4 (July 1990): 757-782.

Woodbury, Stephen A., and Robert G. Spiegelman. “Bonuses to Workers and Employers to Reduce Unemployment: Randomized Trials in Illinois.” American Economic Review 77, no. 4 (September 1987): 513-530.

Ashenfelter, Orley, and Mark W. Plant. “Nonparametric Estimates of the Labor-Supply Effects of Negative Income Tax Programs.” Journal of Labor Economics 8, no. 1, Part 2: Essays in Honor of Albert Rees (January 1990): S396-S415.

Farber, Henry S. “Is Tomorrow Another Day? The Labor Supply of New York City Cabdrivers.” Journal of Political Economy 113, no. 1 (2005): 46-82.

Ashenfelter, Orley, Kirk Doran, and Bruce Schaller. “A Shred of Credible Evidence on the Long Run Elasticity of Labor Supply.” Princeton University Industrial Relations Section Working Paper No. 551, September 2009. (PDF)

Home production and the decision to work; the economics of the family


Gronau, Reuben. “Leisure, Home Production, and Work — The Theory of the Allocation of Time Revisited.” Journal of Political Economy 85, no. 6 (December 1977): 1099-1124.

[Borjas] section 9.12.

[Blau, et al.] chapter 4.

Empirical methods: instrumental variables

[Angrist and Krueger] section 2.2.3.

Angrist, Joshua, and Alan Krueger. “Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments.” Journal of Economic Perspectives 15, no. 4 (Fall 2001): 69-85.

Application: children and their parents’ labor supply

Angrist, Joshua, and William N. Evans. “Children and Their Parent’s Labor Supply: Evidence from Exogenous Variation in Family Size.” American Economic Review 88, no. 3 (June 1998): 450-477.

The demand for labor, minimum wages, monopsony


[Borjas] chapter 3.

[Nicholson and Snyder] chapters 9-11.

Applications: minimum wages and labor supply shifts

Card, David, and Alan Krueger. “Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania.” American Economic Review 84, no. 4 (September 1994): 772-793.

Angrist, Joshua. “Short-Run Demand for Palestinian Labor.” Journal of Labor Economics 14, no. 3 (July 1996): 425-453.

Human capital, education, and training


[Borjas] chapter 6.

Applications: the economic returns to all sorts of human capital

Angrist, Joshua, and Alan Krueger. “Does Compulsory School Attendance Affect Schooling and Earnings?” Quarterly Journal of Economics 106, no. 4 (November 1991): 979-1014.

Angrist, Joshua. “Lifetime Earnings and the Vietnam-Era Draft Lottery: Evidence From Social Security Administrative Records.” American Economic Review 80, no. 3 (June 1990): 313-336.

Krueger, Alan. “How Computers Have Changed the Wage Structure.” Quarterly Journal of Economics 108, no. 1 (February 1993): 33-60.

DiNardo, John E., and Jörn-Steffen Pischke. “The Returns to Computer Use Revisited: Have Pencils Changed the Wage Structure Too?” Quarterly Journal of Economics 112, no. 1 (February 1997): 291-303.

Applications: education production

Angrist, Joshua, and Victor Lavy. “Using Maimonides Rule to Estimate the Effects of Class Size on Academic Achievement.Quarterly Journal of Economics 114, no. 2 (May 1999): 533-575.

Angrist, Joshua, Eric Bettinger, Erik Bloom, Elizabeth King, and Michael Kremer. “Vouchers for Private Schooling in Colombia: Evidence from a Randomized Natural Experiment.” American Economic Review 92, no. 5 (December 2002): 1535-1558.

Angrist, Joshua, Daniel Lang, and Philip Oreopoulos. “Incentives and Services for College Achievement: Evidence from a Randomized Trial.” American Economic Journal: Applied Economics 1, no. 1 (January 2009): 136-163.

Card, David. “The Causal Effect of Education on Earnings.” Chapter 30 in The Handbook of Labor Economics. Vol. 3A. Edited by Orley Ashenfelter and David Card. Amsterdam, The Netherlands: North Holland, 1999, pp. 1801-1863. ISBN: 9780444501875.

Card, David, and Alan Krueger. “Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States.” Journal of Political Economy 100, no. 1 (February 1992): 1-40.

———. “School Quality and Black-White Relative Earnings: A Direct Assessment.” Quarterly Journal of Economics 107, no. 1 (February 1992): 151-200.

Welch, Finis. “Black-White Differences in Returns to Schooling.” American Economic Review 63, no. 5 (December 1973): 893-907.

Krueger, Alan. “Experimental Estimates of the Education Production Functions.” Quarterly Journal of Economics 114, no. 2 (May 1999): 497-532.

Angrist, Joshua, and Victor Lavy. “New Evidence on Classroom Computers and Pupil Learning.” Economic Journal 112, no. 482 (October 2002): 735-765.

The wage structure

[Borjas] chapter 7.

Lemieux, Thomas. “The Changing Nature of Wage Inequality.” Journal of Population Economics 21, no. 1 (January 2007): 21-48.

Autor, David, Lawrence Katz, and Melissa Kearney. “Trends in U.S. Wage Inequality: Re-Assessing the Revisionists.” Review of Economics and Statistics 90, no. 2 (May 2008): 300-323. Also available as National Bureau of Economic Research Working Paper No. 11627, September 2005.

Katz, Lawrence, and David Autor. “Changes in the Wage Structure and Earnings Inequality.” Chapter 26 in The Handbook of Labor Economics. Vol. 3A. Edited by Orley Ashenfelter and David Card. San Diego, CA: Elsevier, 1999, pp. 1463-1555. ISBN: 9780444501875.



[Borjas] chapter 9.

[Blau, et al.] chapter 7.

[Lang] chapters 10-14.

Application: the effects of anti-discrimination policy

Heckman, James, and Brook Payner. “Determining the Impact of Federal Antidiscrimination Policy on the Economic Status of Blacks: A Study of South Carolina.” American Economic Review 79, no. 1 (1989): 138-177.

Acemoglu, Daron, and Joshua Angrist. “Consequences of Employment Protection? The Case of the Americans with Disabilities Act.” Journal of Political Economy 109, no. 5 (October 2001): 915-957.

Unions and bargaining


[Borjas] chapter 10.

Farber, Henry. “Analysis of Union Behavior.” Chapter 18 in The Handbook of Labor Economics. Vol. II. Edited by Orley Ashenfelter and Richard Layard. Amsterdam, The Netherlands: North-Holland, 1986, 1039-1089. ISBN: 9780444878571.

Union relative wage effects

Lewis, H. Gregg. Union Relative Wage Effects: A Survey. Chicago, IL: University of Chicago Press, 1986. ISBN: 9780226477213.

DiNardo, John, and David S. Lee. “Economic Impacts of New Unionization on U.S. Private Sector Employers: 1984-2001.Quarterly Journal of Economics 119, no. 4 (November 2004): 1383-1442.

Ashenfelter, Orley, and George E. Johnson. “Bargaining Theory, Trade Unions, and Industrial Strike Activity.” American Economic Review 59, no. 1 (March 1969): 35-49.

Course Info

As Taught In
Fall 2009
Learning Resource Types
Problem Sets with Solutions