Summary of curriculum - revised version for this semester

Here is the revised list clarifying this semester's curriculum. If there are any questions, please leave them in the comments section below so we can respond to everyone :)

Slides from lecture 13

The slides are here

Correction to exam-solution covered in lecture 13

The solution steps I followed were to

1. Identify optimal response for agent as a function of w and b (with p1 and p2 in general form)
2. Calculate optimal effort using the solution and adding in that p1=0.5 and p2=0.5 - This gave the answer to question 1 in the exam question
3. Calculate the optimal b from the firm's profit maximization Lagrangian. In this problem, as in the first, it makes sense to do this "generally" by employing p1 and p2. I did not do this consistently in the solution I wrote on the blackboard in class. Instead, I sometimes wrote in the optimal effort given that  p1=0.5, at other times using p1 and p2 in symbolic form. The error was pointed out by a student after class: This will give us the right answer to question 2, but this solution is only valid for p1=p2=0.5. In the second part of the exam, when examining how the optimal b is altered with changes in the value of p1, the equation I derived in problem 2 would not give the right answer.

To make sure you have the right expressions, I ran the exam through Mathematica - the full set of expressions and solutions for different values of p1 is given in the below screenshot. The general solution follows the intuition I gave when I solved the optimal b for values p1=p2=0.5: Give the agent the full marginal product of his or her effort, and suck out the "extra utility" this gives the agent (relative to the outside option) with the fixed (and negative) part of the wage. 

Here are what I (hope) are the correct solutions ;)
Let me know in the comments if anything is unclear or confusing:

Answer to question on empirical methods

In today’s lecture some students asked whether you could be given a question where you are asked to formulate an estimation equation for some kind of empirical problem (I think I did this mostly for DiD during the lectures). The answer is, yes, you might get such a problem on the exam.

Seminar 6 - suggested solution

Here is a link to the suggested solution to part 2 by group B.
See you at the last seminar tomorrow (15/11)!

Lecture 12

The slides from the first part of lecture 12 can be found here

The slides on Blanchard's article (which we didn't completely finish with) will follow after lecture 13.

Info about lecture 13

The last lecture is coming up. Depending on how long it takes to cover the chapter on institutions, part of the lecture will go through selected parts of last year's exam. The problem set for this and earlier exams can be found here. Last year's exam is this one.

From seminar 5: New research on immigrants, work and disability.

At the end of seminar 5, we had a discussion about whether or not the results from Bratsberg, Raaum and Røed (2010) are likely to hold also for immigrants who has arrived in Norway more recently. Here is a link to a report from 2011, where the same authors study outcomes for immigrants arriving in Norway during the 80s. For those of you who don't read norwegian, you can look at the figures on page 10-13!

Problem set for next week's seminar

Here is the problem set, and here is the excel worksheet for exercise 1.

Groups A and B prepare solutions.

Lecture 11 - slides

Here are the slides from this week's lecture.

Seminar 5 - referee-report from group E

Here is the report from group E.

Seminar 5: Referee-reports 

Here is the report from group C, here is the report from group D and here is the report from group F.
(Hopefully), the groups will present, and we will discuss the reports at the seminar tomorrow.

Slides from lecture 10

Here are the slides from yesterday's lecture.

Seminar problems

As mentioned during the lecture, the seminar problems for next time consists of writing a short referee-report on a research paper. You should answer the following questions:

- What is the research question?

- Why is the question interesting and relevant?

- How do they try to answer the question?

o What kind of data

o What kind of model

o What kind of identification strategy

o What kind of institutional setting makes identification possible (is it a reform or something else)

- What do they find?

- Are the results credible?

- What kind of problems or weaknesses are discussed and tested for?

- Is there some problems not discussed or tested for you which you find relevant?

Group C: Johansson and Palme: Moral hazard in sickness insurance

Group D: Bratsberg, Raaum and Røed: Immigration

Group E: Zhang and Røed: Unemployment

Group F: Markussen, Mykletun and Røed: Graded sick leave

Lecture: Acitivity requirements in social insurance

The slides for “Activity requirements in social insurance” are found here.

The newspaper article from Ljungqvist and Sargent can be read in Dagens Nyheter

The paper Active Social Insurance by Knut Røed is forthcoming in the IZA Journal of Labor Policy and can be downloaded and read here

The paper The Case for Presenteeism by Simen Markussen, Arnstein Mykletun and Knut Røed is forthcoming in the Journal of Public Economics and can be downloaded and read here

Suggested solution - Seminar 4

Here is the suggested solution to problem 2 by group B. I will go through problem 1 and 2 at the seminar tomorrow.

Problem set - Seminar 4

Here is the problem set for next week's seminar. Groups A and B hand in suggested solutions.

Lecture note: Moral hazard–applications

The slides for the next lecture are found here.

Seminar 3

Here is the suggested solution to part 1 by group E. Here is the suggested solutin to part 2 by group F. And here is group F's do-file. I will go through the problems at the seminar today (Thursday 3/10).

A brief note on curriculum and lecture 7

Earlier this semester we posted a relatively detailed rundown of what we expect you to pick up from the different parts of the curriculum. I mentioned at the time that this would be modified to some extent based on the lectures and seminars. It should be noted that this is highly likely to be the case for the material covered in lecture 7 - as we had more time to go through the different models this year compared to last.

Lecture 7 - two videos

Here are the two videos promised during lecture 7:

Signalling theory of education in a webcomic

 

Not that often webcomics feature economic theory, so I’ll post this.

“The easier college gets, the dumber you look for not having a degree”

Links to articles and supplementary readings

If you are signed in to a computer at UiO (or access UiO IT services from home - see here), you will be able to download the articles from the links provided on this page.

Slides from lecture 7

Here are the slides from lecture 7

Correlation or causality?

Todays Aftenposten presents a study of obesity among kids. They find that the BMI of a three year old child is positively correlated with the mother’s BMI prior to, and during, birth.

They conclude that it is important to avoid overweight before and during pregnancy, in order to avoid obese children. Hence, it is interpret as something causal. However, as people living together tend to eat the same food and share lifestyle it is no wonder why different healt outcomes are correlated within families.

Seminar 3

The seminar problems for seminar 3 are found here.

You will need two datasets which can be downloaded here; FE_unions, Education_IV

Group E are supposed to hand in solutions to problem 1 (Flow and stock variables). Group F are supposed to hand in solutions to problem 2 (Estimation)

Suggested solutions by group C and D - Seminar 2.

Here is the suggested solution to Seminar 2 - Part 1, by group C, and here is the suggested solution to Seminar 2 - Part 2, by group D.

I will go through the exercises and comment on the suggested solutions tomorrow (20/9) at the seminar.

Problems for seminar 2

The seminar problems for the second seminar are found here.

Slides for lectures on empirical methods

The next two lectures will focus on empirical methods much used in labor market research and policy evaluation. You can download the slides for the lectures here.

For the first lecture I recommend reading Angrist and Pische, Mostly harmless econometrics, p. 3-68

Much of the same material is also covered in the textbook “labour economics”, but in a more condensed form, on pages 668-674.

Suggested solutions by group A and B - Seminar 1.

Here is the suggested solution to Seminar 1 - Part 1, by group A, and here is the suggested solution to Seminar 1 - Part 2, by group B.

I will go through the exercises and comment on the suggested solutions tomorrow (6/9) at the seminar.

Job search: Lecture notes and reading

The slides from today’s lecture are available here.

A background paper on the study of labor markets flows are The flow approach to labor markets: New data sources and micro-macro links.

You can read more on the Leibniz rule for differentiation of integrals can be found on Wikipedia.

One of the first papers studying the optimal path of unemployment benefits over time is The optimal payment of unemployment insurance benefits over time by Steven Shavell and Laurence Weiss (1979). You should at least read the introduction. I have written a short note which may help in understanding their argument, it is found here.

A more general paper assessing unemployment policy is: Unemployment insurance: Strenghtening the rrelationship between theory and policy.

Finally, I also recommend three papers that studies what I called the “benefit trap” empirically. These are Moral hazard and sickness insurance, The sick pay trap and Temporary disability insurance and labor suply: Evidence from a natural experiment.

Problem set for first seminar

Here is the problem set for the first seminar. Written solutions from Seminar groups A and B should be handed in to Ragnhild Schreiner by next Wednesday lunch, either by email, in her mail shelf in the Economics Department, or at her office in the Economics department (see problem set for details).

Good luck!

Lecture plan

Here is the lecture plan for this semester

Lecture 2 - Human Capital

Here are the slides from today's lecture

Lecture 1 - slides

Slides from today's lecture can be found here

How to download shared documents

To download - go to "File" and "Download original":

Summary of the curriculum

Last year's summary of the curriculum  is found [here]
As mentioned in today's lecture, there will be some changes to this - but the core will remain as before.

Curriculum: Labor demand with asymmetric linear adjustment costs in a deterministic environment

Here`s the video mentioned in today's lecture that goes through the figure showing labor demand with asymmetric, linear adjustment costs in a deterministic environment.

Note that this is in a deterministic environment - that is: The firm thinks that "wages, productivity, product price and everything else will be the same from now and forever." The figure shows how it reacts if something happens to one of these factors (or mass quitting by workers) and the firm keeps on believing that the future will hold no further changes. If a firm faces changing conditions, on the other hand, such as business cycles, it may pay to aim for smaller adjustments then this: You don`t fire everyone you lose money on in a downturn, because you know you would then need to incur hiring costs to increase the labor stock again when demand picks up again.