Skip to main content


ECO3004 : Labour Economics

  • Offered for Year: 2022/23
  • Module Leader(s): Dr Roberto Bonilla Trejos
  • Owning School: Newcastle University Business School
  • Teaching Location: Newcastle City Campus
Semester 1 Credit Value: 10
Semester 2 Credit Value: 10
ECTS Credits: 10.0


Semester 1 aims: To develop students’ understanding of the principles and techniques used in modern labour economics, and use them to analyse core issues regarding the labour market such as: unemployment, wage formation, discrimination, human capital acquisition, the behaviour of labour market unions and their effect on labour market outcomes, and the relationship between labour markets and trade. The module also analyses empirical issues in the light of the theoretical analysis.

Semester 2 aims: To develop students’ understanding of the principles and techniques used in modern personnel economics, and use them to analyse core issues such as: hiring the right workers, screening contracts, how workers signal productivity, incentive contracts (fixed or variable pay/efficiency wages), retirement decisions, promotion-based incentives, teams, job search and worker mobility.

Outline Of Syllabus

Semester 1:

Topic 1. The Pissarides Model of Unemployment: Unemployment in a frictional labour market
Topic 2. The Burdett-Mortensen model of on-the-job search: Search in the labour market and wage distributions
Topic 3. Efficiency wages in Traditional and frictional models of the labour market.
Topic 4. Raiding, offers and counter offers in frictional markets.
Topic 5. between the labour market and the marriage market: The marriage premium and the beauty premium

Semester 2:

Topic 6. Hiring: Recruitment with perfect information about worker ability. Hiring with symmetric uncertainty about worker ability. Hiring with asymmetric uncertainty. Sorting.
Topic 7. - Signalling. Education and signalling of ability
Topic 8. - Screening and up or out contracts: Contingent contracts and screening. Probation and up-or-out contracts.
Topic 9. Raiding in competitive labour markets
Topic 10. Relative Pay, Tournaments and Promotions
Topic 11. Human Capital: The life cycle human capital model. The Ben-Porath model. Schooling. Measuring the returns to education (Mincer earning functions).

Teaching Methods

Teaching Activities
Category Activity Number Length Student Hours Comment
Scheduled Learning And Teaching ActivitiesLecture72:0014:00All of of these in Term 1. Present-in-person
Scheduled Learning And Teaching ActivitiesLecture11:001:00In Term 2. Present-in-person
Scheduled Learning And Teaching ActivitiesLecture62:0012:00All of these in term 2. Present-in-person
Guided Independent StudyAssessment preparation and completion167:0067:00N/A
Guided Independent StudyDirected research and reading150:0050:00Term 1
Scheduled Learning And Teaching ActivitiesSmall group teaching61:006:003 per term. Present-in-person
Guided Independent StudyIndependent study150:0050:00Term 2
Teaching Rationale And Relationship

1.Lectures give overview of main theoretical ideas and how to obtain theoretical conclusions from economic models.

2.Seminars provide the opportunity for students to work in a group context, critically discuss issues and apply the theoretic developments to real world examples, and for solving analytical problems. This will include Pre-submission clinic to address the Essay (Term 1) and the Final Examination (Term 2).

3.Private study involves following up reading list references for seminar and examination preparation.

Assessment Methods

The format of resits will be determined by the Board of Examiners

Description Length Semester When Set Percentage Comment
Written Examination1202A75Unseen
Other Assessment
Description Semester When Set Percentage Comment
Essay1M251000 words
Formative Assessments
Description Semester When Set Comment
Written Examination2MThere will be a mock exam question in Semester 2. Feedback will be provided in the form individual meetings during office hours.
Assessment Rationale And Relationship

The 25% essay is appropriate to assess understanding beyond what is expected in a time limited unseen examination, allowing the student more options to convey their understanding. The exam is the standard tool for examining theoretical material under time and resource constraints.

The combination of 25% essay and 75% exam allows to test a wider set of skills, and also helps the student to obtain timely feedback for the final exam.

The proposed exam is suitable for online take home if required.

Reading Lists