Briefly explain why labour supply is more volatile in the short-run

Essay Question for Macroeconomics A Rubric You are to write a 3,000 word structured essay on the following question. Question In class we saw that labour supply, measured by total hours worked, is constant in the long-run, but has big cyclical upswings. However, for the last two decades hours worked for men in the US have not been constant but increasing for richer/more educated workers and declining for poorer/less educated workers. You are asked to discuss the possible reasons behind this decline. In particular: (a) Briefly explain why labour supply is more volatile in the short-run. Using the model we saw in class, explain why hours worked fluctuate in the short-run but are stable on the long-run. [40 marks] (b) Show how the labour supply for men in the US has evolve in the last 10 years. Using academic sources or data, show the decline in participation or hours among males with different levels of education. [30 marks] (c) Discuss possible channels for this. Could the labour supply model we studied in class account for this? What other explanations are there? [30 marks] Background and Guidance This is an essay, so you are expected to so some reading on your own, and incorporate your findings into a cohesive piece of work. The questions above are to guide you on how to structure your essay, as well as give you hints on what the marker will value most so you know what you should be focussing on. You need to compose a structured, cohesive argument. Words are more important than numbers here. They best way to incorporate equations and formulas in an essay is to use only the most important ones and explain them in words. In this essay I suggest you use data, and a good place to look for it is the OECD online database. You can instead use plots and statistics from academic papers if you prefer to do so. Below is a list of resources you can start with, but feel free to do your own reading. You can in fact approach the discussion part in any way you like: empirical evidence on the evolution of hours worked, the role of female labour supply in couples, the increased in the value of leisure, skill-biased technological change, anything that is relevant for the question and that you find interesting. The discussion part is where to show off the work and research you put into the essay. But do not digress completely off topic without a good argument. You are expected to show some critical assessment of the topic, and your ability to do that without losing track of the question is very important. A good practice is when you finish your essay, read it and ask yourself: did my essay answer the questions? Does it sound like a coherent piece of writing, with introduction, development and conclusion? Did it show understanding of the material for the course? Did I incorporate some readings into it? A final piece of advice of reading academic papers: you don’t need to read the whole thing, but to get the general idea from the paper. Don’t be intimidated by how technical it sounds, most economics papers have a simple idea in mind. Readings Key Readings Class notes 3b on Macroeconomics 1 part A. Kuhn, Peter, and Fernando Lozano. “The expanding workweek? Understanding trends in long work hours among US men, 19792006.” Journal of Labor Economics 26, no. 2 (2008): 311-343. Costa, Dora L. “The Wage and the Length of the Work Day: From the 1890s to 1991.” Journal of Labor Economics 18, no. 1 (2000): 156-181. Further Readings Aguiar, Mark, and Erik Hurst. “Measuring trends in leisure: the allocation of time over five decades.” The Quarterly Journal of Economics 122, no. 3 (2007): 969-1006. Cortes, Patricia, and Jessica Pan. “When Time Binds: Returns to Working Long Hours and the Gender Wage Gap among the Highly Skilled.” (2016). Gicheva, Dora. “Working long hours and early career outcomes in the high-end labor market.” Journal of Labor Economics 31, no. 4 (2013): 785-824. Michelacci, Claudio, and Josep Pijoan-Mas. “The effects of labor market conditions on working time: The US-EU experience.” (2007).