Course content

The course deals with three topics: First, an introduction is given to how employment contracts should be designed in situations with different types of incomplete information. Secondly, the theory of efficiency wages is treated where the firm uses wages to influence productivity, turnover, and recruitment. Third, wage and employment determination in organized labour markets are analyzed. Emphasis is placed on comparing the outcomes given centralized and decentralized wage determination, respectively.

Learning outcome

Knowledge

You learn

• how optimal employment contracts should be designed in different situations with insufficient information. You should understand what characterizes such contracts in different situations.
• how companies can use wages to increase productivity, reduce turnover, and improve recruitment. You should understand how the company sets the wage and how this is affected by exogenous factors.
• how wages and employment are determined when workers are organized. You should understand why wages are different with centralized and decentralized wage setting, respectively, and what consequences wage formation regimes have for productivity, employment, and investments.

Skills

You should be able to

• formulate and solve problems using theories for the decisionmakers’ behavior in the situations with incomplete information
• formulate and solve problems using theories for efficiency wages
• formulate and solve problems using theory of wage formation in organized labour markets

General competence

You should be able to

• understand key results and arguments in reports and research articles that address issues discussed in the course
• use the course content to provide good input in discussions and debates
• use the course content as a theoretical basis for own work such as the master's thesis

Learning methods and activities

2-4 hours of lectures per week and 2 hours of exercise every other week during the teaching period. The course starts in week 5, i.e. after EiT intensive.

Compulsory activity: Requirements are specified in detail at the start of the semester.

Compulsory assignments

• Compulsory aktivity

Recommended previous knowledge

SØK3004

Required previous knowledge

None

Course materials

Announced at the beginning of the term.

Credit reductions