The Labour Economics module provides students with the opportunity to build on the theoretical analysis and the quantitative techniques introduced in the Year 2 modules by applying what they have learnt to examining the workings of the UK labour market. Specifically, its role is to develop intermediate microeconomic and macroeconomic analysis to investigate the nature, causes and implications of unemployment and wage differentials.  The module introduces the results of empirical work in order to evaluate both economists’ explanations of labour market behaviour and alternative policy options for improving performance.

The Labour Economics module aims to provide students with a sound understanding of the method, content and scope of Labour Economics, a basic knowledge of the workings of the UK Labour Market, and an appreciation of current problems and policies.

A    Knowledge and Understanding:

• identify the main structural changes taking place in the UK Labour Market, and to outline the trends in the central Labour Market outcomes
• recognise the contribution of economic theory to Labour Market analysis, and to relate the models they encounter to observed outcomes
• access the main forms and sources of data on the Labour Market, and to apply UK data to topics they have covered
• outline the main sources of Labour Market distortions and failures, and to demonstrate their importance

B    Intellectual Skills: 

• report and explain the main findings of Labour Economics empirical research on topics they have covered
• understand the role of empirical evidence in Labour Economics in elucidating specific debates
• grasp the distinction between alternative explanations of Labour Markets outcomes, but be able to bring together their insights to improve understanding
• appreciate the main policy initiatives to improve Labour Market performance, and to evaluate the options

C    Discipline Specific Skills: 

• apply basic labour economics concepts and ideas to a range of labour market issues
• use theoretical analysis to identify the key issues raised by problematic market outcomes
• work out how best to rigorously investigate specific aspects of labour market behaviour

D    Transferable Skills: 

• listen to and read effectively economic literature, from journal articles to newspaper commentaries
• write coherently on major economic issues
• introduce statistical results into economic discussions
• work independently on economic problems, managing their time and resources efficiently
• operate in small groups, sharing ideas and reaching collective views
• develop logical arguments and make sensible decision as to their value
• deliver lucid presentations on economic research and current policy

Teaching takes place in the Autumn and Spring semesters. There are approximately 34 hours of lectures and 12 hours of classes covering 8 core topics. 

Staff have produced a series of background papers which cover the theoretical and technical material relating to some of the topics covered. Students are advised to work on these first and foremost. Thereafter students are encouraged to move on to journal articles and in particular to articles from the empirical literature. 

Lectures are used to identify the structure of each topic, cover the more difficult technical material and introduce relevant interesting extensions and applications.  The classes are a combination of workshops and seminars.  In the workshops students work in small groups on set problems related to the lecture theoretical material.  The students have the opportunity to get to know one another and to develop their group/communication skills.  The seminars cover the empirical work associated with each topic.  Students prepare and deliver oral presentations with overheads and handouts of their (individual and group) work on set readings from the empirical literature. They thus have the opportunity to develop their presentation/communication skills as well as their understanding of the applied elements of labour economics.

Indicative study hours:   200

In terms of informal assessment, working with small groups within the workshops and seminars, enables staff the opportunity to gauge the abilities, work and character of each student on the module.  The module encourages a variety of discipline specific and core skills.  Much of the work on the module is student driven, so students have ample opportunity to demonstrate their skills.

The assignments require the integration and assessment of economic theory and empirical material.  The examination paper requires the student to solve problems using the theoretical and technical material they have met.  This allows students to demonstrate their intellectual skills in synthesis.  The questions require the application of labour economics to specific aspects of unemployment and wage differentials.  This encourages/allows students to demonstrate their intellectual skills in evaluation.

Together the informal and formal assessment activities allow staff to identify whether the module’s learning outcomes are being realised.

The Labour Market and Trade Unions; modelling & estimating the union mark up and the effects of unions on productivity, profits etc.  The Labour Market and Structural Change: mismatch, structural change and labour market flexibility. The Internal Labour Market; productivity and efficiency wages, structured internal labour markets. Labour Market Dynamics; flows, duration, hysterisis, long term unemployment, & Insider/Outsider analysis. The Distribution of Earnings; compensating wage differentials, Human Capital theory. Explaining Male/Female Earnings Differentials; discrimination, segmentation and the UK wage differential.  Personnel Economics; Human Resource Management, high performance work systems, performance related pay as an incentive system.

D Bosworth et al The Economics of the Labour Market Longman, Essex

S Polachek & W S Siebert The Economics of Earnings CambridgeUniversityPress