Labor Economics


This is a course about the most important market in the economy: the labor market. The key issues tackled in Labor Economics include job creation, job destruction, unemployment, wage bargaining, discrimination, wage inequality, trade unions, and the future of labor. Important economic policies are rationalized in terms of
labor economic theory: labor taxes, minimum wages, employment subsidies, unemployment benefits, welfare programs, gender quotas, etc. By the end of the course, the student should be guided by economic theory when interpreting these topics.

General characterization





Responsible teacher

Pedro Portugal


Weekly - Available soon

Total - Available soon

Teaching language




Modern Labor Economics: Theory and Policy (11th edition) by Ronald Ehrenberg and Robert Smith, edited by Addison Wesley, 2011.

Labour Economics by P. Cahuc and A. Zylberberg, edited by MIT press, 2004.

Teaching method

While lectures cover the core materials, it is important that students supplement classroom time with pre-class preparation, through independent study. Background reading is expected.
Discussion of particular topics based on applied research will be pursued. Personal guidance on the production of the research note will be assured by the teacher.

Evaluation method

Evaluation regime: individual research note (50%) + final exam. (50%) (Subjected to the approval of the research project)

Subject matter

  • 1. The Labor Market:

  • 1.1 Overview.

  • 2. The Demand for Labor:

  • 2.1 Competitive Markets;

  • 2.2 Non-Competitive Markets.

  • 3. Labor Demand Elasticities:

  • 3.1 The role of minimum wages.

  • 4. Quasi-Fixed Adjustment Costs:

  • 4.1 Firing costs and employment adjustment.

  • 5. Labor Supply:

  • 5.1 The Decision to Work;

  • 5.2The Choice of Hours;

  • 5.2.1 The Effects of Changing Working Time Legislation in Portugal.

  • 6. Home Production:

  • 6.1 Home Production and the Allocation of Time;

  • 6.1.1 The INE Survey on Allocation of Time.

  • 7. Wage Compensating Differentials:

  • 8. Human Capital Investment:

  • 8.1 The Investment in Human Capital;

  • 8.2 General and Specific Investment;

  • 8.3 Education and Training;

  • 8.3.1 Wage-spillover effects from education.

  • 9. Worker Mobility:

  • 9.1 Worker and Job Flows in Portugal and in the US.

  • 10. Wage Determination:

  • 10.1 The sources of wage variation.

  • 11. Discrimination in the Labor Market:

  • 11.1 Everything you always wanted to know about sex discrimination.

  • 12. Unions and Wage Bargaining:

    12.1 The union wage gap.

  • 13. Wage Inequality:

  • 13.1 The sources of wage dispersion.

  • 14. Unemployment:

  • 14.1 Unemployment Insurance and the Duration of Unemployment.

  • 15. The Determinants of the Reservation Wages in the European Union.

    16.    The Future of Work Describe Course Content