The Economics of Imperfect Labor Markets, Third Edition

Tito Boeri and Jan van Ours

The leading textbook on imperfect labor markets and the institutions that affect them—now completely updated and expanded

Hardcover

Sale Price:: $63.00/£52.50
Price:: ~~$90.00~~/~~£75.00~~
ISBN:
Published:: Jan 26, 2021
Copyright:: 2021
Illus:: 141 b/w illus. 71 tables.
Main_subject:: Economics & Finance

ebook

Sale Price:: $63.00/£52.50
Price:: ~~$90.00~~/~~£75.00~~
ISBN:
Published:: Jan 26, 2021
Copyright:: 2021
Illus:: 141 b/w illus. 71 tables.
Main_subject:: Economics & Finance

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Today’s labor markets are witnessing seismic changes brought on by such factors as rising self-employment, temporary employment, zero-hour contracts, and the growth of the sharing economy. This fully updated and revised third edition of The Economics of Imperfect Labor Markets reflects these and other critical changes in imperfect labor markets, and it has been significantly expanded to discuss topics such as workplace safety, regulations on self-employment, and disability and absence from work. This new edition also features engaging case studies that illustrate key aspects of imperfect labor markets.

Authoritative and accessible, this textbook examines the many institutions that affect the behavior of workers and employers in imperfect labor markets. These include minimum wages, employment protection legislation, unemployment benefits, family policies, equal opportunity legislation, collective bargaining, early retirement programs, and education and migration policies. Written for advanced undergraduates and beginning graduate students, the book carefully defines and measures these institutions to accurately characterize their effects, and discusses how these institutions are being transformed today.

Fully updated to reflect today’s changing labor markets
Significantly expanded to discuss a wealth of new topics, including the impact of the COVID-19 pandemic
Features quantitative examples, new case studies, data sets that enable users to replicate results in the literature, technical appendixes, and end-of-chapter exercises
Unique focus on institutions in imperfect labor markets
Self-contained chapters cover each of the most important labor-market institutions
Instructor’s manual available to professors—now with new exercises and solutions

Tito Boeri is professor of economics at Bocconi University in Milan and visiting professor at the European Institute at the London School of Economics. Twitter @Tboeri Jan van Ours is professor of applied economics at Erasmus University Rotterdam in the Netherlands and honorary professorial fellow in economics at the University of Melbourne.

List of Boxes
Preface and Acknowledgments
Symbols and Acronyms
1 Overview
- 1.1 Why Study Labor Economics?
- 1.2 The Two Key Decisions
  - 1.2.1 The Labor Supply Decision
  - 1.2.2 The Labor Demand Decision
- 1.3 Labor Market Equilibrium
  - 1.3.1 A Perfect Labor Market
  - 1.3.2 An Imperfect Labor Market
- 1.4 Labor Market Institutions
  - 1.4.1 Why Do Labor Market Institutions Exist?
  - 1.4.2 Institutions Matter
- 1.5 Measures of Labor Market Outcomes
  - 1.5.1 Stock Measures
  - 1.5.2 Flow Measures
  - 1.5.3 Problems with Standard Measures of Labor Market Status
- 1.6 Documenting Reforms in Labor Market Institutions
- 1.7 Review Questions and Exercises
- 1.8 Technical Annex: Competitive Pressures and Institutions
  - 1.8.1 A Competitive Labor Market
  - 1.8.2 Labor Market Institutions
  - 1.8.3 The Wedge
  - 1.8.4 Product Market Competition and the Employment Bias of Institutions
2 Minimum Wages
- 2.1 Cross-Country Comparisons
- 2.2 Theory
  - 2.2.1 A Perfect Labor Market
  - 2.2.2 An Imperfect Labor Market
- 2.3 Empirical Evidence
  - 2.3.1 Studies Based on Firm-Level or Household Survey Data
  - 2.3.2 Studies Based on Natural Experiments
  - 2.3.3 Studies Based on Matched Employer-Employee Data
- 2.4 Policy Issues
  - 2.4.1 Are Minimum Wages Effective in Reducing Poverty?
  - 2.4.2 Should There Be a Youth Minimum Wage?
- 2.5 Interactions with Other Institutions
- 2.6 The Future of the Minimum Wage
- 2.7 Suggestions for Further Reading
- 2.8 Review Questions and Exercises
- 2.9 Technical Annex: Minimum Wage Revisited
  - 2.9.1 Minimum Wage and Monopsony
  - 2.9.2 Bargaining or Government Setting?
  - 2.9.3 Efficiency Wages and the Solow Condition
3 Unions and Collective Bargaining
- 3.1 Measures and Cross-Country Comparisons
  - 3.1.1 Union Density
  - 3.1.2 Coverage and Excess Coverage
  - 3.1.3 Centralization and Coordination
  - 3.1.4 The Extension of Collective Bargaining
  - 3.1.5 Strike Activity
- 3.2 Theory
  - 3.2.1 A Perfect Labor Market
  - 3.2.2 An Imperfect Labor Market
- 3.3 Empirical Evidence
  - 3.3.1 Bargaining Coordination, Union Density, and Unemployment
  - 3.3.2 Effects of Unions on Wages
  - 3.3.3 Characteristics of the Collective Bargaining System
- 3.4 Policy Issues
  - 3.4.1 Do Unions Increase Efficiency?
  - 3.4.2 Should Occupational Licensing Be Restricted?
- 3.5 Interactions with Other Institutions
- 3.6 The Future of Unions
- 3.7 Suggestions for Further Reading
- 3.8 Review Questions and Exercises
- 3.9 Technical Annex: Unions Revisited
  - 3.9.1 How Strong Must Unions Be to Be Efficient?
  - 3.9.2 Deriving the Contract Curve
4 Anti-Discrimination Legislation
- 4.1 Measures and Cross-Country Comparisons
- 4.2 Theory
  - 4.2.1 A Perfect Labor Market
  - 4.2.2 An Imperfect Labor Market
- 4.3 Empirical Evidence
  - 4.3.1 Cross-Country Differences
  - 4.3.2 Discrimination in the Labor Market
- 4.4 Policy Issues
  - 4.4.1 Should Applications Be Anonymized?
  - 4.4.2 Should Minority Quotas Be Introduced?
- 4.5 Interactions with Other Institutions
- 4.6 The Future of Anti-Discrimination Legislation
- 4.7 Suggestions for Further Reading
- 4.8 Review Questions and Exercises
- 4.9 Technical Annex: Issues on Discrimination
  - 4.9.1 Prejudice in a Competitive Labor Market
  - 4.9.2 Monopsony and Gender Discrimination
  - 4.9.3 Unobserved Heterogeneity and Correspondence Studies
5 Regulation of Working Hours
- 5.1 Measures and Cross-Country Comparisons
  - 5.1.1 Legal Restrictions on Working Hours
  - 5.1.2 Regulations of Part-Time Employment
  - 5.1.3 Subsidized Short-Time Work
- 5.2 Theory
  - 5.2.1 A Perfect Labor Market
  - 5.2.2 An Imperfect Labor Market
- 5.3 Empirical Evidence
  - 5.3.1 Macro Facts about Working Hours
  - 5.3.2 Microeconomic Evidence on the Effects of Reductions in Working Hours
- 5.4 Policy Issues
  - 5.4.1 Should Governments Regulate Working Hours?
  - 5.4.2 Should Governments Subsidize Short-Time Work?
- 5.5 Interactions with Other Institutions
- 5.6 The Future of Working Hours Regulations
- 5.7 Suggestions for Further Reading
- 5.8 Review Questions and Exercises
- 5.9 Technical Annex: Intensive and Extensive Margins
6 Early Retirement Plans
- 6.1 Measures and Cross-Country Comparisons
- 6.2 Theory
  - 6.2.1 A Perfect Labor Market
  - 6.2.2 An Imperfect Labor Market
- 6.3 Empirical Evidence
  - 6.3.1 Macro Facts about Retirement
  - 6.3.2 Microeconomic Evidence on Push Factors
  - 6.3.3 Microeconomic Evidence on Pull Factors
- 6.4 Policy Issues
  - 6.4.1 How Much Flexibility in Early Retirement?
  - 6.4.2 Should We Have Mandatory Retirement?
- 6.5 Interactions with Other Institutions
- 6.6 The Future of Early Retirement
- 6.7 Suggestions for Further Reading
- 6.8 Review Questions and Exercises
- 6.9 Technical Annex: Optimal Retirement Age
  - 6.9.1 The Optimal Retirement Age
  - 6.9.2 Young and Older Workers: Crowding In or Out?
7 Family Policies
- 7.1 Measures and Cross-Country Comparisons
  - 7.1.1 Childcare
  - 7.1.2 Parental Leave
- 7.2 Theory
  - 7.2.1 A Perfect Labor Market
  - 7.2.2 An Imperfect Labor Market
- 7.3 Empirical Evidence
  - 7.3.1 Cross-Country Variation
  - 7.3.2 Microeconometric Evidence
- 7.4 Policy Issues
  - 7.4.1 Should Paternity Leave Be Encouraged?
  - 7.4.2 How to Encourage Mothers with Young Children to Work?
- 7.5 Interactions with Other Institutions
- 7.6 The Future of Family Policies
- 7.7 Suggestions for Further Reading
- 7.8 Review Questions and Exercises
- 7.9 Technical Annex: Family Policies and the Household
  - 7.9.1 Childcare Facilities
  - 7.9.2 The Surplus from Home Production
  - 7.9.3 The Unitary and Collective Models of the Household
8 Education and Training
- 8.1 Measures and Cross-Country Comparisons
- 8.2 Theory
  - 8.2.1 A Perfect Labor Market
  - 8.2.2 An Imperfect Labor Market
- 8.3 Empirical Evidence
  - 8.3.1 Cross-Country Comparison
  - 8.3.2 Estimating the Returns to Schooling
  - 8.3.3 On-the-Job Training
- 8.4 Policy Issues
  - 8.4.1 Should Governments Subsidize In-Company Training?
  - 8.4.2 Should There Be Early School Tracking?
- 8.5 Interactions with Other Institutions
- 8.6 The Future of Education and Training
- 8.7 Suggestions for Further Reading
- 8.8 Review Questions and Exercises
- 8.9 Technical Annex: Schooling and Training
  - 8.9.1 Optimal Years of Schooling
  - 8.9.2 Signaling
  - 8.9.3 Derivation of the Mincer Equation
  - 8.9.4 Who Pays for General Training?
9 Migration Policies
- 9.1 Measures and Cross-Country Comparisons
- 9.2 Theory
  - 9.2.1 A Perfect Labor Market
  - 9.2.2 Skilled and Unskilled Migration
  - 9.2.3 Relocation of Native Workers, Firms, and Migrants
- 9.3 An Imperfect Labor Market
  - 9.3.1 An Economy with Wage Rigidities
  - 9.3.2 Labor Market Externalities
  - 9.3.3 What Drives Migration Decisions?
- 9.4 Empirical Evidence
  - 9.4.1 Macro Facts about Migration
  - 9.4.2 Microeconomic Evidence
- 9.5 Policy Issues
  - 9.5.1 How to Compensate the Losers?
  - 9.5.2 How to Handle the Labor Market of Refugees?
- 9.6 Interactions with Other Institutions
- 9.7 The Future of Migration Policies
- 9.8 Suggestions for Further Reading
- 9.9 Review Questions and Exercises
- 9.10 Technical Annex: Cost and Benefits of Migration
  - 9.10.1 The Net Gains from Migration
  - 9.10.2 Heterogeneous Labor and Wage Rigidities
10 Employment Protection Legislation
- 10.1 Measures and Cross-Country Comparisons
- 10.2 Theory
  - 10.2.1 A Perfect Labor Market
  - 10.2.2 An Imperfect Labor Market
- 10.3 Empirical Evidence
  - 10.3.1 Macro Facts
  - 10.3.2 Microeconomic Evidence
- 10.4 Policy Issues
  - 10.4.1 What Is the Optimal Level of EPL?
  - 10.4.2 Should There Be a Graded Security Contract?
- 10.5 Interactions with Other Institutions
- 10.6 The Future of EPL
- 10.7 Suggestions for Further Reading
- 10.8 Review Questions and Exercises
- 10.9 Technical Annex: The Political Economy of Two-Tier Reforms
  - 10.9.1 The Quest for Flexibility
11 Regulations on Self-Employment
- 11.1 Measures and Cross-Country Comparisons
- 11.2 Theory
  - 11.2.1 A Perfect Labor Market
  - 11.2.2 An Imperfect Labor Market
- 11.3 Empirical Evidence
  - 11.3.1 Macro Facts
  - 11.3.2 Micro Evidence on the Two Faces of Self-Employment
- 11.4 Policy Issues
  - 11.4.1 Should Self-Employment Be Promoted?
  - 11.4.2 Should Social Insurance Be Mandatory for the Self-Employed?
- 11.5 Interactions with Other Institutions
- 11.6 The Future of Self-Employment Regulations
- 11.7 Suggestions for Further Reading
- 11.8 Review Questions and Exercises
- 11.9 Technical Annex: The Choice between Self-Employment and Dependent Employment and Finance
  - 11.9.1 Self-Selection into Self-Employment
  - 11.9.2 Complementarity between Labor and Financial Frictions
12 Unemployment Benefits and Active Labor Market Policies
- 12.1 Measures and Cross-Country Comparisons
- 12.2 Theory
  - 12.2.1 A Perfect Labor Market
  - 12.2.2 An Imperfect Labor Market
- 12.3 Empirical Evidence
  - 12.3.1 Cross-Country Differences
  - 12.3.2 Effects of UB on Unemployment Duration
  - 12.3.3 Effect of UB on Post-Unemployment Outcomes
  - 12.3.4 ALMP Studies
- 12.4 Policy Issues
  - 12.4.1 Do We Need Activation Policies?
  - 12.4.2 Should the Generosity of Unemployment Benefits Vary over the Cycle?
- 12.5 Interactions with Other Institutions
- 12.6 The Future of UB and ALMP
- 12.7 Suggestions for Further Reading
- 12.8 Review Questions and Exercises
- 12.9 Technical Annex: Job Search Theory
  - 12.9.1 Unemployment Benefits in a One-Sided Search Model
  - 12.9.2 Two-Sided Job Search and Matching
  - 12.9.3 Statistical Foundations of the Matching Function
  - 12.9.4 Activating Unemployed Workers
13 Health-Related Labor Policies
- 13.1 Cross-Country Comparisons
  - 13.1.1 Workplace Safety
  - 13.1.2 Disability and Absenteeism
- 13.2 Theory
  - 13.2.1 A Perfect Labor Market
  - 13.2.2 An Imperfect Labor Market
- 13.3 Empirical Evidence
  - 13.3.1 Workplace Accidents and Safety Policies
  - 13.3.2 Sickness and Disability
- 13.4 Policy Issues
  - 13.4.1 Do Workplace Safety Regulations Benefit Firms?
  - 13.4.2 Should Absenteeism Be Monitored More Strictly?
- 13.5 The Future of Health-Related Labor Policies
- 13.6 Interactions with Other Institutions
- 13.7 Suggestions for Further Reading
- 13.8 Review Questions and Exercises
- 13.9 Technical Annex: Reporting Workplace Accidents
14 Payroll Taxes
- 14.1 Measures and Cross-Country Comparisons
- 14.2 Theory
  - 14.2.1 A Perfect Labor Market
  - 14.2.2 An Imperfect Labor Market
- 14.3 Empirical Evidence
- 14.4 Policy Issues
  - 14.4.1 How to Make Work Pay?
  - 14.4.2 How to Pay and Target Beneficiaries?
- 14.5 Interactions with Other Institutions
- 14.6 The Future of Payroll Taxes
- 14.7 Suggestions for Further Reading
- 14.8 Review Questions and Exercises
- 14.9 Technical Annex: Payroll Taxes
  - 14.9.1 A Perfect Labor Market
  - 14.9.2 An Imperfect Labor Market
References
Name Index
Subject Index

"Understanding the role of labor market institutions is a difficult but central task. Good institutions can alleviate the adverse effects of the many imperfections that characterize labor markets. But unfortunately bad institutions can, and often do, make things worse. By relying on simple theory and an accumulating body of careful evidence, this book helps us think straight. An essential read for anybody interested in going beyond clichés and understanding what institutions do and should do."—Olivier Blanchard, Massachusetts Institute of Technology

"An invaluable survey of how policy affects the labor market, using the best of theory and empirical evidence."—Richard Layard, London School of Economics

"A very useful book aimed at providing a theoretical explanation and empirical reviews of evidence about a number of important issues in labor economics."—Peter Cappelli, Journal of Economic Literature

"By focusing on frontline policy debates, this book should hold the interest of students who often find traditional labor economics courses a bit dry."—Alan Manning, London School of Economics

"There is no real equivalent to this book. And although it is an undergraduate-level textbook, it may also interest economists working at government institutions and international organizations who want an accessible review of the academic literature."—Fabien Postel-Vinay, University College London

The Economics of Imperfect Labor Markets, Third Edition

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