1. Introduction to Labour Economics

KAT.TAL.322 Advanced Course in Labour Economics

Nurfatima Jandarova

March 6, 2024

Course structure

Instructor: Nurfatima Jandarova (nurfatima.jandarova@tuni.fi)

Classes: 90 min lectures twice a week on Wed and Thu 14:00 - 16:00

No class on 21 March!

8 lectures + 2-3 classes devoted to final assessment

All course information on Moodle

Check classrooms on Sisu calendar

No office hours (contact by email)

Final assessment

Short presentation of a research proposal

  • Choose a topic related to labour economics

  • Individual or groups of 2-3 students

  • 20-25 min presentations at the end of April


Form groups (on Moodle) by 15 March!

Requirements to research proposals

  • Clear research question
  • Importance and contribution


  • Clear exposition of model
  • Comparative statics/predictions/simulations
  • ⭐ Plan for testing with the data


  • Potential dataset (sample, variables)
  • Empirical strategy (challenges, assumptions)
  • ⭐ Interpretation/potential mechanisms


Choose a topic early (weeks 1-2)!

Select one published paper as a “template”1

Some useful resources:

Labour Economics

What is Labour Economics?

Labour economics studies how labour markets work.

Main actors in the labour market:

  • workers (sellers)

  • firms (buyers)

  • government

Why study Labour Economics?

Labour market is the largest market.

  • Work accounts for ~30% of waking hours
  • Employees account for 70-90% of employment
  • Labour income accounts for ~60% of total output

Time spent working

Source: Cahuc (2004)

Labour share in GDP

Positive vs Normative Economics (do vs should)

Positive economics

How do markets work?


  • does minimum wage affect employment?
  • does AI affect labour demand?
  • does tuition fee affect college decision?

Normative economics

How should markets work?


  • should the minimum wages be abolished?
  • should AI firms compensate laid off workers?
  • should tuition be financed by loans or grants?

Topics in labour economics

Selected topics

  • Models of labour supply and demand

  • Human capital

  • Technological advances

  • Gender inequality

  • Intergenerational mobility

Other topics

  • Job search and matching

  • Migration

  • Trade unions

  • Taxes and welfare state

  • Labour markets and economic growth

Example: labour supply

Female labour force participation


Countries plotted: Canada, Germany, Finland, United Kingdom, Norway, Sweden, United States
Source: International Labor Organization (ILO) and Olivetti (2013)

Example: labour demand

Computerisation and automation

Digitization of workplaces in Finland

Source: Statistics Finland (2024)

50% of jobs face high risk of computerisation

Source: Frey and Osborne (2017)

Example: employment

Minimum wages

Minimum wages in Europe

Example: human capital

University expansion

Higher education graduates

Example: inequality

Also labour economics topics

Carlana (2019) Implicit Stereotypes: Evidence from Teachers’ Gender Bias

“Teacher stereotypes induce girls to underperform in math”

Doepke and Zilibotti (2019) Love, Money and Parenting

“how economic forces and growing inequality shape how parents raise their children”

Oswald and Powdthavee (2008) Does happiness adapt? A longitudinal study of disability with implications for economists and judges

“people who become disabled go on to exhibit considerable recovery in mental well-being”

Adams-Prassl et al. (2023) The Dynamics of Abusive Relationships

“labor market consequences of cohabiting with an abusive spouse”

Overview of lectures

Introduction to Labour Economics
Labour Supply
Labour Demand
Human Capital
Education Quality
Technological shift and labour markets
Labour market discrimination
Intergenerational mobility


Adams-Prassl, Kristiina Huttunen, Emily Nix, and Ning Zhang. 2023. “The Dynamics of Abusive Relationships.” Working Paper. Minneapolis, MN, USA. April 2023. https://doi.org/10.21034/iwp.71.
Cahuc, Pierre. 2004. Labor Economics. Cambridge (Mass.): MIT Press.
Carlana, Michela. 2019. “Implicit Stereotypes: Evidence from TeachersGender Bias*.” The Quarterly Journal of Economics 134 (3): 1163–1224. https://doi.org/10.1093/qje/qjz008.
Doepke, Matthias, and Fabrizio Zilibotti. 2019. Love, Money, and Parenting: How Economics Explains the Way We Raise Our Kids. Princeton University Press.
Frey, Carl Benedikt, and Michael A. Osborne. 2017. “The Future of Employment: How Susceptible Are Jobs to Computerisation?” Technological Forecasting and Social Change 114 (January): 254–80. https://doi.org/10.1016/j.techfore.2016.08.019.
Olivetti, Claudia. 2013. “The Female Labor Force and Long-run Development: The American Experience in Comparative Perspective∗.” November 2013. https://www.bu.edu/econ/files/2012/11/olivetti_chapter_November2013_complete.pdf.
Oswald, Andrew J., and Nattavudh Powdthavee. 2008. “Does Happiness Adapt? A Longitudinal Study of Disability with Implications for Economists and Judges.” Journal of Public Economics 92 (5): 1061–77. https://doi.org/10.1016/j.jpubeco.2008.01.002.
Statistics Finland. 2024. “Use of Information Technology in Enterprises by Year, Size Category of Personnel and Information.” https://statfin.stat.fi/PXWeb/api/v1/en/StatFin/icte/statfin_icte_pxt_13vg.px.