9780262033169

This landmark graduate-level text combines depth and breadth of coverage with recent, cutting-edge work in all the major areas of modern labor economics. Labor Economicsis the only textbook available for advanced graduate students in the field, and it will be widely used; because of its command of the literature and the freshness of the material included, it will also prove to be a valuable resource for practicing labor economists. The book moves back and forth between factual data and theoretical reasoning. The space devoted to theory reflects the profound theoretical restructuring in the field that has taken place in the last thirty years; the authors present these developments within a unified pedagogic framework. The teaching methods are based on mathematical models, with the mathematical analyses laid out clearly, and the derivation of most results given in five mathematical appendixes that provide a toolkit for understanding the models. The book is divided into four parts: "Supply and Demand Behaviors" examines the determinants of labor supply and demand; "Wage Formation" discusses wage determinants, including the influences of the wage policies of firms and collective bargaining; "Unemployment and Inequality" considers these problems in a macroeconomic setting; and "Institutions and Economic Policy" treats labor market policies and the impact of institutions on labor market performance.

Introduction	p. xxiii
Acknowledgments	p. xxxv
Supply and Demand Behaviors	p. 1
Labor Supply	p. 3
The Neoclassical Theory of Labor Supply	p. 5
Empirical Aspects of Labor Supply	p. 27
Summary and Conclusion	p. 51
Related Topics in the Book	p. 52
Further Readings	p. 52
Appendices	p. 53
Education and Human Capital	p. 59
Some Facts	p. 61
The Theory of Human Capital	p. 69
Education as a Signaling Device	p. 79
Evaluations of the Returns to Education	p. 85
Summary and Conclusion	p. 102
Related Topics in the Book	p. 103
Further Readings	p. 103
Job Search	p. 107
Basic Job Search Theory	p. 109
The Equilibrium Search Model and the Theory of Optimal Unemployment Insurance	p. 125
Empirical Aspects of Job Search	p. 146
Summary and Conclusion	p. 164
Related Topics in the Book	p. 165
Further Readings	p. 166
Appendix: The Discounted Cost of an Unemployed Person	p. 166
Labor Demand	p. 171
The Static Theory of Labor Demand	p. 173
From Theory to Estimates	p. 205
Labor Demand and Adjustment Costs	p. 212
Summary and Conclusion	p. 232
Related Topics in the Book	p. 233
Further Readings	p. 234
Appendices	p. 234
Wage Formation	p. 243
Compensating Wage Differentials and Discrimination	p. 245
Perfect Competition and Compensating Wage Differentials	p. 248
Obstacles to Perfect Competition (1): Barriers to Entry	p. 257
Obstacles to Perfect Competition (2): Imperfect Information	p. 265
What Empirical Studies Tell Us	p. 276
Summary and Conclusion	p. 298
Related Topics in the Book	p. 299
Further Readings	p. 299
Contracts, Risk-Sharing, and Incentive	p. 305
The Labor Contract	p. 307
Risk-Sharing	p. 309
Incentive in the Presence of Verifiable Results	p. 322
Incentive in the Absence of Verifiable Results	p. 333
Summary and Conclusion	p. 360
Related Topics in the Book	p. 361
Further Readings	p. 361
Collective Bargaining	p. 369
Unions and Collective Bargaining	p. 371
Bargaining Theory	p. 380
Standard Models of Collective Bargaining	p. 393
Insiders and Outsiders	p. 405
Investment and Hours	p. 411
Empirical Evidence Regarding the Consequences of Collective Bargaining	p. 419
Summary and Conclusion	p. 429
Related Topics in the Book	p. 431
Further Readings	p. 431
Appendices	p. 431
Unemployment and Inequality	p. 441
Unemployment and Inflation	p. 443
Some Facts	p. 445
From the Classical Model to the Keynesian View	p. 454
Nominal Rigidities: The Critiques of Friedman and Lucas	p. 471
Real Rigidities: Hysteresis and the Wage Curve	p. 476
Estimates of the NAIRU and Wage Equations	p. 485
Summary and Conclusion	p. 491
Related Topics in the Book	p. 493
Further Readings	p. 493
Appendices	p. 493
Job Reallocation and Unemployment	p. 503
Job Flows and Worker Flows	p. 505
The Competitive Model with Job Reallocation	p. 514
The Matching Model	p. 517
Investment and Employment	p. 537
Out-of-Stationary-State Dynamics	p. 545
The Efficiency of Market Equilibrium	p. 550
Summary and Conclusion	p. 557
Related Topics in the Book	p. 558
Further Readings	p. 558
Technological Progress, Globalization, and Inequalities	p. 563
Does Technological Progress Destroy More Jobs Than It Creates?	p. 565
Globalization, Inequality, and Unemployment	p. 582
Summary and Conclusion	p. 625
Related Topics in the Book	p. 626
Further Readings	p. 626
Appendix	p. 626
Institutions and Economic Policy	p. 633
Labor Market Policies	p. 635
Labor Market Policies: An International Perspective	p. 636
Active Policies: Theoretical Analysis	p. 644
The Evaluation of Active Labor Market Policies	p. 668
The Macroeconomic Effects of Unemployment Benefits	p. 687
Conclusion and Summary	p. 704
Related Topics in the Book	p. 707
Further Readings	p. 707
Institutions and Labor Market Performance	p. 713
The Minimum Wage	p. 715
Employment Protection	p. 734
Taxation	p. 751
The Level at Which Wage Bargaining Takes Place	p. 768
Macroeconomic Assessments of Institutions	p. 777
Summary and Conclusion	p. 783
Related Topics in the Book	p. 784
Further Readings	p. 785
Mathematical Appendices	p. 791
Appendix A: Static Optimization	p. 791
Unconstrained and Constrained Maximum	p. 791
The Technique of the Lagrangian	p. 792
The Interpretation of the Lagrange Multipliers	p. 793
Summary and Practical Guide to Static Optimization	p. 793
Appendix B: Dynamic Optimization	p. 794
The Optimal Control Problem	p. 794
The First-Order Conditions	p. 795
Infinite Horizon	p. 796
Calculus of Variations and the Euler Equation	p. 796
Summary and Practical Guide to Optimal Control	p. 797
Appendix C: Basic Notions Concerning Random Variables	p. 798
Random Variables and Probability Densities	p. 798
Independence and Correlation	p. 799
The Probability Distributions Utilized in This Book	p. 800
Appendix D: The Poisson Process and the Value of an Asset	p. 801
The Poisson Process	p. 801
Evolution of the Value of an Asset	p. 802
An Alternative Proof	p. 803
Appendix E: Systems of Linear Difference Equations	p. 803
A Particular Solution	p. 804
The General Solution	p. 804
Stability	p. 806
A Useful Form for the Stability Conditions	p. 807
The Phase Diagram	p. 808
User Guide for the Study of Two-Dimensional Linear Systems	p. 809
Notes	p. 811
Name Index	p. 823
Subject Index	p. 831
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Labor Economics

026203316X

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