Please check with the BSE Handbook which mandatory courses you have to choose in your PhD track. Not all courses listed here can be approved as Core Courses for all BSE PhD tracks.


This course in labor economics is appropriate for Master and Ph.D. students in Economics and other students with preparation in microeconomic theory and econometrics. The course teaches core topics in the field of labor economics as well as empirical methods for applied microeconomic analysis.

Wooldridge, Jeffrey, 2002, Econometric Analysis of Cross Section and Panel Data, MIT Press, Cambridge, Massachusetts.
Stock, James, and Mark Watson, 2003, Introduction to Econometrics, Addison-Wesley.

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Search and matching frictions as a fundamental defining attribute of labor markets. Introduction to search theory. Jovanovic’s model. Models of wage-posting. Roy model of spatial mobility. Incorporation of search-matching frameworks in general equilibrium models: Diamond, Mortensen/Pissarides, and other macro models. Welfare analysis.


The following topics will be covered in the course:

  • The drawbacks of Marshallian analysis of the labor market
  • Nonsequential and sequential models of search: Stigler v. McCall
  • Search models: A dynamic programming perspective
  • Continuous time formulations
  • Search on the job, directed search
  • The Jovanovic model
  • Equilibrium models of unemployment and search: Diamond/Mortensen/Pissarides
  • Models of wage posting and monopsony (Burdett/Mortensen)
  • Macro models with search frictions in the labor market (Merz, Andolfatto, Shimer)
  • Insights from search and matching models for economics of labor market institutions


Literature of Labor Markets with Search and Matching Frictions:

  • Andolfatto, David. 1996. “Business Cycles and Labor-Market Search.” American Economic Review, 86(1): 112–32.
  • Boeri, Tito and Jan van Ours (2009) Imperfect Labor Markets Princeton: Princeton University Press.
  • Burdett, Keith, and Mortensen, Dale T., (1998) “Wage Differentials, Employer Size, and Unemployment.” International Economic Review 39: 257-273.
  • Cahuc Pierre and André Sylberberg (2004) Labor Economics Cambridge, USA: MIT Press.
  • Diamond, Peter A. (1982) “Aggregate Demand Management in Search Equilibrium.” Journal of Political Economy, 90(5): 881–94.April 12 2010 3.
  • Franz, Wolfgang (2006) Arbeitsmarktökonomik Berlin: Springer.
  • Jovanovic, Boyan (1979a). “Job Matching and the Theory of Turnover.” Journal of Political Economy, 87(5): 972–90.
  • Jovanovic, Boyan (1979b) “Firm-Specific Capital and Turnover.” Journal of Political Economy, 87(6): 1246–60.
  • Lyungqvist Lars and Thomas Sargent (2004) Recursive Macroeconomic Theory Cambridge, USA: MIT Press.
  • Manning, Alan (2003) Monopsony in Motion Princeton: Princeton University Press.
  • Merz, Monika. 1995. “Search in the Labor Market and the Real Business Cycle.” Journal of Monetary Economics, 36(2): 269–300.
  • Mortensen, Dale T., and Christopher A. Pissarides.1994. “Job Creation and Job Destruction in the Theory of Unemployment.” Review of Economic Studies, 61(3): 397–415.
  • Mortensen, Dale T., and Christopher A. Pissarides.1999a. “New Developments in Models of Search in the Labor Market,” in Handbook of Labor Economics. O. Ashenfelter and D. Card, eds. Amsterdam: North Holland, 2567–2627.
  • Pissarides, Christopher (2000) Equilibrium Unemployment Theory Cambridge MA MIT Press.
  • Rogerson Richard, Robert Shimer and Randall Wright (2005) “Search-theoretic Models of the Labor Market: A Survey” Journal of Economic Literature 43: 959-588.
  • Sargent, Thomas (1987) Dynamic Macroeconomic Theory Harvard: Harvard University Press Chapter 2.
  • Shimer Robert, (2009) Labor Markets and Business Cycles, Manuscript, University of Chicago.
  • Stigler, George. 1961. “The Economics of Information.” Journal of Political Economy, 69(3):213–25.
  • Shimer, Robert (2005) “The Cyclical Behavior of Equilibrium Unemployment and Vacancies.” American Economic Review, 95(1): 25–49.
  • Zenou, Z. (2008) „Job Search and Mobility in Developing Countries: Theory and Policy Implications” Journal of Development Economics 86: 336-355.
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This course will cover a variety of numerical methods for solving dynamic stochastic general equilibrium models, including policy and value function iteration, log-linearization and Euler equation methods. In addition, students will learn how to choose parameters for models by calibration.

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