The Third Edition incorporates three major changes. Responding to a frequent request by many users, this edtion includes an even larger number of policy applications and detailed description of state-of-the-art research studies. There are now a sufficiently large number of applications that users can pick and choose, depending on the nature of the course that is being taught.
Second, I expand on the tradition started in the Second Edition of including detailed examples of how labor economists use state-of-the-art econometric tools. In the last edition, I introduced the "difference-in-differences" methodology and showed how it has been widely used to answer important questions in labor economics. The new edition contains even more examples of this methodology, and it introduces the method of "visual" instrumental variables. The instrumental variables approach, a cornerstone of empirical research in modern labor economics, is, at its core, quite easy to understand and shows students how labor economists take seriously the link between theory and empirical work.
Finally, many of the new examples and applications involve labor markets or policy changes outside the United States. The new edition includes discussions of the relation between economic development and labor supply, how school construction programs in Indonesia can be used to estimate the rate of return to schooling, and the impact of work sharing programs on employment in Germany.
1. Introduction
2. Labor Supply
3. Topics in Labor Supply
4. Labor Demand
5. Labor Market Equilibrium
6. Compensating Wage Differentials
7. Human Capital
8. The Wage Structure
9. Labor Mobility
10. Labor Market Discrimination
11. Labor Unions
12. Incentive Pay
13. Unemployment