The course discusses labour demand with a focus on topics emphasised in recent research such as the labour market impact of technological change and the role of firm-level pay-practices for wage inequality between men and women.
The first half of the course, taught by Georg Graetz, explores the determinants of labour demand and wages, taking as point of departure a frictionless, perfectly competitive labour market. Theoretical frameworks studied include neo-classical producer theory and the task framework. An overview of recent empirical evidence is given, with focus on wage inequality, job polarisation, technological change, and the interaction of technology adoption and immigration. This part also covers the causal identification of shocks to labour demand (and supply), and discusses some recent insights on Bartik (shift-share) instruments, with applications to trade, technology, and immigration.
The second part of the course, taught by Oskar Nordström Skans, focuses on the role of firms in the labour market. We discuss how to identify (and model) firm-level wage rents and the impact these rents have on wage inequality in general and across different groups of workers. Special emphasis is also put on understanding the granularities of the process when workers are matched to jobs: What is the role of uncertainty and learning about worker abilities? How does uncertainty affect firms’ hiring practices? What is the role of social networks?
This course is part of a sequence of second-year courses in labour economics taught jointly with Stockholm University.