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ECON 301 (18 points) Labour Economics COURSE OUTLINE Semester One, 2019

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ECON 301 (18 points)

Labour Economics

COURSE OUTLINE

Semester Two, 2014

Semester One, 2019

Page 1

Welcome to Econ301!

The labour market is undoubtedly the most important market that impacts directly on almost all of us for a significant period of our lives. This course aims to introduce students to key theories, issues and problems in the analysis of labour markets. It uses microeconomic and macroeconomic theory to increase understanding of labour demand, labour supply and labour market outcomes. It addresses issues associated with changes in participation rates, the effect of minimum wage rates, the impact of unions, income inequality, labour market discrimination, unemployment (its causes and consequences) and also looks at an historical analysis of New Zealand’s labour market legislation. The internal assessments and final exam will test whether or not the student can analyse issues in labour economics critically, using relevant economic principles and theory.

Learning Outcomes

Upon successful completion of this paper, students should have a general understanding of how

labour markets operate. Students should develop both knowledge and appreciation of applying

general economic principles and theory in evaluating behaviour and interactions in the labour

market. Related to this, students should be able to use quantitative data and develop qualitative

analysis to explain how labour market outcomes change over time. Students should learn to analyse

current issues and policy debates in this area and be able to assess and critique labour market policies

from a more knowledgeable perspective.

Lecturer and lecture/tutorial times

Paper Coordinator and Lecturer: Arlene Ozanne Rm 5.28 Otago Business School [email protected] Office Hours: Tues, Thur, Fri: 11-12 or email for an appointment Lecture Day/Time: Mondays @ 11am; Tuesdays @ 2pm; Wednesdays @ 9am;

Room: Check EVISION Tutorials: One a fortnight beginning week 3

Tutorial times – check EVISION for your allocated stream Wednesday @ 1pm

Thursday @ 1pm Thursday @ 2pm

Rooms: check EVISION Lectures present the key conceptual material through discussion and interaction between teaching

staff and students. Lectures are supported by readings.

Tutorials are interactive, collaborative sessions in which students attempt to cement concepts

presented at lectures with their peers in a supportive environment.

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Tutorials will be held every second week (adjusted for the mid-semester break week), starting in the third week of the semester. That is, tutorials will be held on the weeks beginning:

March 11

March 25

April 8

April 29

May 13

May 27

Tutorials offer you the opportunity to work in groups on a series of tasks designed to apply the

concepts that you have been exposed to in class and from your reading, and to stimulate your interest

in the course as it applies to “everyday” issues. The key feature of tutorials, as opposed to lectures

and individual study, is participation of all members of the tutorial group.

Tutorial questions will be posted on Blackboard the week prior to the scheduled tutorial. Please

prepare for tutorials before going to them.

What to do if you miss a lecture or tutorial If you miss a lecture, you can obtain a copy of the lecture slides from Blackboard. Note however, that the slides only provide an outline of what was covered in lectures. You should fill these out by doing the relevant reading, considered to be an essential part of the training you gain from a university education. If you miss a tutorial, try to attend another tutorial group for that week. If that is not possible, have a go at doing the questions and come and discuss them with the lecturer. Note that model answers to tutorials will not be made available. One reason for this is that providing model answers would create a disincentive to participate fully in tutorials.

Expectations and Workload

ECON 301 is a first semester 18-point paper. Note that under the University’s point conventions, an 18-point paper corresponds approximately to 12 hours per week, or roughly 180 hours of total workload (including classes and private study time) over a 15-week period (including the end-of-semester exam period).

Course Learning Resources

The text for this course is Labor Economics, 2016, 7th edition, by George J. Borjas, McGraw-Hill Irwin. Two copies of this book will be on the Reserve Desk. This text will cover most aspects of the course, however, when supplementary reading is needed, these are available on eReserve on Blackboard. The references in the course will be based on the latest, i.e. 7th edition of the text, but students may also use the Labor Economics, 2013, 6th edition, by George J. Borjas, McGraw-Hill Irwin. However, it is the students’ responsibility to confirm the corresponding page numbers in the earlier edition of the text.

Page 3

Blackboard

Blackboard https://blackboard.otago.ac.nz/ provides you with access to course materials, class

notices, and resources. Blackboard is used to email the whole class so it is important that you check

your student email and Blackboard regularly, or use EVISION to redirect your emails to your personal

account.

Student Webmail

IMPORTANT - DO THIS NOW: Forward your University email address to an email address that you use regularly as follows:

1. Log into your StudentMail account using your student username and password 2. Click Cog button (top right corner) > Options 3. Under Account, select the Forward your email shortcut under the Short Cuts menu on the

right side of the screen. 4. At the bottom of the screen, type in the email address you want your email to be forwarded to.

You can also choose to have a copy of these emails kept on your StudentMail account, so please check the box if you would like this.

5. Click the Start forwarding link at the bottom of the page.

Assessment

All material presented is examinable (except where stated otherwise) by assignments, tests and the

final examination. All important assessment information such as dates and times, content,

guidelines and so on will be discussed at lectures and, where appropriate, detailed on Blackboard.

Students are responsible for ensuring that they are aware of this information, keeping track of their own

progress, and catching up on any missed classes.

Course Requirements

The final exam will make up 60% of your final mark, with the remaining 40% being made up of quizzes. Quizzes (40%) Quizzes will be held fortnightly during the WEDNESDAY lecture time (except Quiz 4), beginning week 2 until week 10. There will be five quizzes, made up of multiple-choice and/or short-answer type questions. Each quiz will be worth 10%, however, ONLY YOUR FOUR HIGHEST QUIZ MARKS WILL COUNT TOWARDS YOUR FINAL MARK. Quiz 1 March 6 Quiz 2 March 20 Quiz 3 April 3 Quiz 4 April 16 (Tuesday) Quiz 5 May 8 It is not possible to sit the quizzes at any other date or time. If you are genuinely unable to make any of the quizzes, you need to contact the lecturer as soon as possible.

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Final exam (60%) The final exam will be three hours long, and made up of a combination of multi-choice, and written-answer questions. The final exam will cover the whole course. The University will report the exam timetable later in the semester.

Quality Assurance

At the Otago Business School we monitor the quality of student learning and your learning experience. Your assessed work may be used for assurance of learning processes, such as evaluating the level of achievement of learning outcomes, with the aim of improving the quality of our programmes. All material used for quality assurance purposes will be treated as confidential and the outcome will not affect your grades.

Grading System

The grading scheme used at Otago is:

A+ 90-100 C+ 60-64 A 85-89 C 55-59 A- 80-84 C- 50-54 B+ 75-79 D 40-49 B 70-74 E <40 B- 65-69

Academic Integrity and Academic Misconduct

(Plagiarism)

Students should ensure that all submitted work is their own. Plagiarism is a form of dishonest

practice (cheating). It is defined as copying or paraphrasing another’s work and presenting it as your

own. Any student found responsible for dishonest practice in any piece of work submitted for

assessment shall be subject to the University’s dishonest practice regulations, which may result in

serious penalties, including forfeiture of marks for the piece of work submitted, a zero grade for the

paper, or in extreme cases, exclusion from the University. The University of Otago reserves the right

to use plagiarism detection tools.

Students are advised to inform themselves about University policies concerning dishonest practice

and take up opportunities to improve their academic and information literacy. If necessary, seek

advice from academic staff, or the Student Learning Centre. The guideline for students is available

at this link: http://www.otago.ac.nz/study/plagiarism/

The Library resource on ethical use of information is available via this link:

http://oil.otago.ac.nz/oil/module8.html

Page 5

Student Learning Support and Information

Student Charter

http://www.otago.ac.nz/about/otago005275.html

Guidelines for Learning at Otago

http://hedc.otago.ac.nz/hedc/wp-content/uploads/2012/12/Guidelines-for-Learning.pdf http://hedc.otago.ac.nz/hedc/learning/

Student Learning Centre

The Student Learning Centre, which is part of the Higher Education Development Centre, provides

learning support, free of charge, to ALL enrolled students. Their services include:

a workshop programme designed to help students to improve their learning strategies and their

generic skills;

individual assistance with learning issues;

on-line study skills advice;

a student leadership programme

a student-led peer support programme for students of all ages and backgrounds.

conversational English groups for students from a non-English speaking background

The Centre also provides two very helpful study guides, “Guidelines for Writing and Editing” and “Writing University Assignments” and these are available on the SLC website. http://slc.otago.ac.nz/

Library Support

The Library website http://www.otago.ac.nz/library provides access to resources and services, including group room bookings, library hours and locations, past exam papers, subject guides, article databases and more. If you need assistance either check out the self-help guides http://otago.libguides.com/selfhelp, or ask Library staff at the ground floor service desks, or email [email protected]

Study Smart The library has designed an area, accessible through Blackboard that will help support you with research and referencing. See Study Smart folder in Blackboard. This Study Smart link contains an interactive study hub of research support resources provided by the Library, Student IT and the Student Learning Centre. It includes: • Getting Started – what you need to know in your first couple of weeks • Resources for finding information for your assignments • Finding information on the web that is appropriate for your studies • Tools and resources to help you study efficiently • Where to get help when you need it • Additional assistance is available from the University Library liaison: http://otago.libguides.com/liaison

Page 6

Māori Student Support Rachel Sizemore (Ngāi Tahu) Kaiārahi Māori Tel: +64 3 479 5342 Email: [email protected] Rachel provides tautoko to Māori students in the Business School. Offering an ear to listen, help with scholarships, extra tutorials, and to liaise with academic departments and Student Services with regards to those students and their intended course of study. Rachel offers support also to those studying away from their whanau, hapū and iwi, to feel safe and supported.

Pacific Islands’ Student Academic Advisor

Warm Pacific Greetings Talofa lava, my name is Esmay Eteuati and my role is to liaise with Academic Departments and Student Services relating to Pacific students’ and their course of study. I support both staff and students in the Business School and have a network of Pacific contacts in other Divisions around the University. Tel +64 3 479 4756 Email: [email protected]

Disability Information and Support

Students are encouraged to seek support if they are having difficulty with their studies due to disability, temporary or permanent impairment, injury or chronic illness. It is important to seek help early, through one of the contacts below: Janet Bryant Rm 5.06 Otago Business School 479-8656 [email protected]

Student Feedback

We encourage your feedback. This can be in the form of contacting staff, participating in course

evaluation surveys and communicating with class representatives. Continual improvements will be

made to this course based in part on student feedback.

Class Representatives

The class (or student) representative system is an avenue for encouraging communication and

consultation between staff and students. It provides you with a vehicle for communicating your views

on the teaching and delivery of the paper and provides staff with an opportunity to communicate

information and gain constructive feedback from students. It contributes to the development of a

sense of community within a department and it adds a further dimension to the range of support

services offered to students.

Volunteers for the role of class representatives will be called early in the semester. The OUSA invites

all class representatives to a training session, conducted by OUSA, about what it means to be a class

representative and some of the possible procedures for dealing with issues that arise. They also

provide information on the services that OUSA offers and the role OUSA can play in solving problems

that may occur. The OUSA provides support to class representatives during the semester.

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Departmental staff will also meet with class representatives during the semester to discuss general

issues or matters they wish to have considered.

Your class representative’s name and contact details will be posted on Blackboard early in the

semester.

Concerns about the Course

We hope you will feel comfortable coming to talk to us if you have a concern about the course. The

Course Coordinator will be happy to discuss any concerns you may have. Alternatively, you can report

your concerns to the Class Representative who will follow up with departmental staff. If, after making

approaches via these channels, you do not feel that your concerns have been addressed, there are

University channels that may aid resolution. For further advice or more information on these, contact

the departmental administrator or head of department.

Disclaimer

While every effort is made to ensure that the information contained in this document is accurate,

it is subject to change. Changes will be notified in class and via Blackboard. Students are

encouraged to check Blackboard regularly. It is the student’s responsibility to be informed.

Page 8

Course Calendar

Note that this calendar may change as the course proceeds. Any changes will be announced at

lectures and detailed on Blackboard.

Students are expected to prepare for and attend all classes to gain full benefit from the course. Week 1 – week beginning February 25

Introduction and the Labour Supply

Course outline, objectives, etc.

An Economic Story of the Labour Market; Measuring the Labour Force; Basic Facts about Labour Supply; The Worker’s Preferences; The Budget Constraint; The Hours-of-Work Decision; To Work or Not to Work?; The Labour Supply Curve; Estimates of the Labour Supply Elasticity; Labour Supply of Women; Policy Applications

Reading: Borjas (2016), chapters 1 and 2 Other readings relevant to this topic:

The Economist (2006) “Tough love works”, 29 July 2006, pp.13-14. The Economist (2006) “From welfare to workfare”, 29 July 2006, pp.34-36.

Week 2 – week beginning March 4 Labour Supply continued

Labour Supply over the Life Cycle; Labour Supply over the Business Cycle; Retirement; Policy Application: The Decline in Work Attachment among Older Workers; Fertility

Reading: Borjas (2016) chapter 2 Week 3 – week beginning March 11 Labour Demand

The Production Function; Employment Decision in the Short Run. Employment Decision in the Long Run; The Long-Run Demand Curve for Labour; The Elasticity of Substitution; Marshall’s Rules of Derived Demand; Factor Demand with Many Inputs; Overview of Labour Market Equilibrium; Policy Application: The Employment Effects of Minimum Wages; Adjustment Costs and Labour Demand

Reading: Borjas (2016), chapter 3 pp. 84-106, 109-133, 139-143. Week 4 – week beginning March 18 Labour Market Equilibrium

Equilibrium in a Single Competitive Labour Market; Competitive Equilibrium across Labour Markets; Policy Applications; Immigration; The Cobweb Model

Reading: Borjas (2016) chapter 4

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Week 5 – week beginning March 25 Labour Market Equilibrium continued

Noncompetitive Labour Markets: Monopsony and Monopoly Reading: Borjas (2016) chapter 4 Compensating Wage Differentials

The Market for Risky Jobs; The Hedonic Wage Function; Policy Applications; Compensating Differentials and Job Amenities

Reading: Borjas (2016) chapter 5 Week 6 – week beginning April 1 Human Capital

Education in the Labour Market; the Schooling Model; Education and Earnings; Rates of Return to Schooling; Schooling as a Signal

Reading: Borjas (2016) chapter 6 pp. 229-281. Other readings relevant to this topic: Heady, B. and Warren, D. (2008). Families, Incomes and Jobs, Volume 3: A Statistical Report on Waves 1 to 5 of the HILDA Survey, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, pp. 89-92. The Economist (2017a) “The people’s champion: Human capital”, 5 August 2017, online edition. The Economist (2018a) “Time to end the academic arms race”, 3 February 2018, p14. The Economist (2018b) “All must have degrees”, 3 February 2018, pp.51-52. Week 7 – week beginning April 8 Human Capital continued

On-the-Job Training and Age-Earnings Profiles. Reading: Borjas (2016) chapter 6 pp. 229-281. Other readings relevant to this topic: Heady, B. and Warren, D. (2008). Families, Incomes and Jobs, Volume 3: A Statistical Report on Waves 1 to 5 of the HILDA Survey, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, pp. 89-92. The Economist (2017a) “The people’s champion: Human capital”, 5 August 2017, online edition. The Economist (2018a) “Time to end the academic arms race”, 3 February 2018, p14. The Economist (2018b) “All must have degrees”, 3 February 2018, pp.51-52. The Wage Structure

The Earnings Distribution; Measuring Inequality; The Wage Structure; Why has Wage Inequality Increased; Inequality Across Generations

Reading: Borjas (2016) chapter 7 Recommended Reading: Maré, D.C. and Stillman, S. 2010. "Passing it on: The intergenerational transmission of human capital in New Zealand families," Families Commission Research Fund report, Families Commissions, Wellington.

Page 10

Week 8 – week beginning April 15 Labour Mobility

Types of Labour Mobility; The Determinants of Migration; The Decision to Migrate; The Economic Benefits from Migration.

Reading: Borjas (2016) chapter 8 Recommended Reading: Yow, A., Garces-Ozanne, A. and Audas, R. (2015) “The Carousel and the Conveyor belt: The Migration of Doctors in New Zealand”, Labour & Industry, 25(3), 219-234. Note: There will be no lectures on Wednesday, April 17. Mid-semester break (April 22 to April 26) Week 9 – week beginning April 30 Note: There will be no lectures on Monday, April 29. Labour Market Discrimination

Race and Gender in the Labour Market; The Discrimination Coefficient; Different Theories of Discrimination; Measuring Discrimination; The Oaxaca Decomposition; Policy Applications; Discrimination Against Other Groups

Reading: Borjas (2016) chapter 9 Other readings relevant to topic 6 include: Alexander, W.R.J. and Williams, J.R. (2001) “A Critique of ‘Maori Socio-Economic Disparity’”, New Zealand Population Review, 27, pp. 27-35. Alexander, W.R.J., Genc, M and Jaforullah, M. (2001) “Maori Disadvantage in the Labour Market”, University of Otago, Department of Economics Discussion Paper No. 0108, 22pp. Alexander, W.R.J. (2001) “Ethnic Gaps and Ethnic Ratios”, Political Science, 53, pp. 29-32. The Economist (2017b) “Men, women and work: The gender gap”, 7 October 2017, online edition. Week 10 – week beginning May 6 Labour Market Discrimination continued

Race and Gender in the Labour Market; The Discrimination Coefficient; Different Theories of Discrimination; Measuring Discrimination; The Oaxaca Decomposition; Policy Applications; Discrimination Against Other Groups

Reading: Borjas (2016) chapter 9 Other readings relevant to topic 6 include: Alexander, W.R.J. and Williams, J.R. (2001) “A Critique of ‘Maori Socio-Economic Disparity’”, New Zealand Population Review, 27, pp. 27-35. Alexander, W.R.J., Genc, M and Jaforullah, M. (2001) “Maori Disadvantage in the Labour Market”, University of Otago, Department of Economics Discussion Paper No. 0108, 22pp. Alexander, W.R.J. (2001) “Ethnic Gaps and Ethnic Ratios”, Political Science, 53, pp. 29-32. The Economist (2017b) “Men, women and work: The gender gap”, 7 October 2017, online edition.

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Labour Unions Unions: a Brief History; Determinants of Union Membership; Monopoly Unions; The Effects of Unions; Public-Sector Unions.

Reading: Borjas (2016) chapter 10 Other readings relevant to this topic:

Dalziel. P. and Lattimore, R. (2004) The Economist (2015) “Why trade unions are declining”, 28 September 2015, online edition.

Week 11 – week beginning May 13 Labour Unions continued

Unions: a Brief History; Determinants of Union Membership; Monopoly Unions; The Effects of Unions; Public-Sector Unions.

Reading: Borjas (2016) chapter 10 Other readings relevant to this topic:

Dalziel. P. and Lattimore, R. (2004) The Economist (2015) “Why trade unions are declining”, 28 September 2015, online edition.

Revision/Catch-up Weeks 12 and 13 – week beginning May 20 and 27 Help sessions as needed.

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List of Supplementary Readings All these readings are available on Blackboard under the Course Documents folder: eReserve. [1] The Economist (2006) “Tough love works”, 29 July 2006, pp.13-14. [2] The Economist (2006) “From welfare to workfare”, 29 July 2006, pp.34-36. [3] Heady, B. and Warren, D. (2008). Families, Incomes and Jobs, Volume 3: A Statistical Report on

Waves 1 to 5 of the HILDA Survey, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, pp. 89-92.

[4] The Economist (2017a) “The people’s champion: Human capital”, 5 August 2017, online

edition. [5] The Economist (2017b) “Men, women and work: The gender gap”, 7 October 2017, online

edition. [6] The Economist (2018a) “Time to end the academic arms race”, 3 February 2018, p14. [7] The Economist (2018b) “All must have degrees”, 3 February 2018, pp.51-52. [8] Maré, D.C. and Stillman, S. 2010. "Passing it on: The intergenerational transmission of human

capital in New Zealand families," Families Commission Research Fund report, Families Commissions, Wellington.

[9] Yow, A., Garces-Ozanne, A. and Audas, R. (2015) “The Carousel and the Conveyor belt: The

Migration of Doctors in New Zealand”, Labour & Industry, 25(3), 219-234. [10] Alexander, W.R.J. and Williams, J.R. (2001) “A Critique of ‘Maori Socio-Economic Disparity’”,

New Zealand Population Review, 27, pp. 27-35. [11] Alexander, W.R.J., Genc, M and Jaforullah, M. (2001) “Maori Disadvantage in the Labour

Market”, University of Otago, Department of Economics Discussion Paper No. 0108, 22pp. [12] Alexander, W.R.J. (2001) “Ethnic Gaps and Ethnic Ratios”, Political Science, 53, pp. 29-32. [13] Dalziel, P. And Lattimore, R. (2004) The New Zealand Macroeconomy, Chapter 8 (Labour

Policy) pp. 99-112, Oxford University Press.

[14] The Economist (2015) “Why trade unions are declining”, 28 September 2015, online edition.