Report on the 2nd IZA European Summer School in Labor Economics, 1999


The two lecture series of the 2nd IZA summer school were held by Costas Meghir (University College and FIS, London) on "Labor Supply and Consumption over the Life-Cycle", and Dennis Snower (Birbeck College, London) on the "Employment and Unemployment Dynamics".

Professor Meghir gave a series of five lectures on "Labor Supply and Consumption over the Life-Cycle". Models of labor supply were presented emphasizing an empirical angle. The lectures began with investigation of a static model with reference to policy analysis, in particular reforms to UK tax and benefit systems. Current empirical practice in labor supply was reviewed. Analysis then turned to consideration of a dynamic model, allowing for consumption and labor supply in an intertemporal context. Estimation with panel data and repeated cross sections was discussed with particular attention to issues relating to identification and estimation in the presence of heterogeneity. The lecture series concluded with an introduction to collective models of labor supply.

Professor Snower presented a series of five lectures on "Employment and unemployment dynamics". This more theoretically based series began with a look at the stylized facts on unemployment in Europe and America. Theoretical challenges in explaining unemployment and the definition of involuntary unemployment were then considered. Efficiency wage and insider outsider models were reviewed with consideration of how wages are used as an incentive mechanism and the mechanisms through which unemployment rises. The second section of the lecture series considered the dynamics of unemployment. The natural rate and chain reaction theories of unemployment were evaluated. Finally possible policy solutions were analyzed together with consideration of how well theory to date can explain the stylized facts of unemployment.