The course will require an understanding of dynamic optimization techniques and elementary stochastic process theory at the level of Stokey and Lucas, Recursive Methods in Economic Dynamics, Harvard University Press, 1989. The following papers serve as the introduction to the topics covered in the lectures and should be read in their entirety.

D. T. Mortensen and C. A. Pissarides. "New Developments in Models of Search in the Labour Market," CEPR Discussion Paper No. 2053, Jan, 1999. Also forthcoming in Ashenfelter and Card, eds., The Handbook of Labor Economics, vol. 3. Amsterdam: North Holland, 1999.

D.T. Mortensen and C.A. Pissarides. "Job Reallocation, Employment Fluctuations and Unemployment," Centre for Economic Performance Discussion Paper 421, LSE, April, 1999. Also forthcoming in Taylor and Woodford, eds., The Handbook of Macroeconomics. Amsterdam: North Holland, 1999.

1. Job Search

G. J. Stigler, "Information in the Labor Market," JPE 70 (1962): 94-105.

	J.J. McCall, "Economics of Information and Job Search," QJE (1970): 113-126.
	D.T. Mortensen, "Job Search, The Duration of Unemployment, and the Phillips Curve," AER 60 (1970): 505-517.

	K. Burdett, "Employee Search and Quits," AER 68 (1978): 212-220.
	D.T. Mortensen, "Specific Capital and Labor Turnover," Bell Journal (1978): 572-586.

B. Jovanovic, "Job-Matching and the Theory of Turnover," JPE 87 (1979): 972-990.

P. A. Diamond, "Wage Determination and Efficiency in Search Equilibrium," Journal of Political Economy 89 (1980): 798-812.

D. T. Mortensen, "The Matching Process as a Noncooperative/Bargaining Game" in J.J. McCall, ed., The Economics of Information and Uncertainty, University of Chicago Press (1982): 233-254.

D.T. Mortensen, "Job Search and Labor Market Analysis" in Ashenfelter and Layard, eds., Handbook of Labor Economics, vol 2: 849-920. Amsterdam: North Holland, 1986.

R. Ehrenberg and R. Oaxaca, "Unemployment Insurance, Duration of Unemployment, and Subsequent Wage Gain," AER 66 (1976):754-766.

N. M. Kiefer and G.R. Neumann, "An Empirical Job Search Model with a Test of the 'Constant Reservation Wage Hypothesis," JPE 87 (1979): 89-107.

B.D. Meyer, "Unemployment Insurance and Unemployment Spells," Econometrica 58 (1990): 757-782.

T.J. Devine and N.M. Keifer, Empirical Labor Economics: The Search Approach, Oxford University Press (1991).

1. Equilibrium Unemployment

K. Binmore, A. Rubinstein and A. Wolinsky, "The Nash Bargaining Solution in Economic Modeling," Rand Journal 17 (1989): 176-188.

C. A. Pissarides, Equilibrium Unemployment Theory, Basil Blackwell (1990).

A. J. Hosios, "On the Efficiency of Matching and Related Models, REStuds 57 (1990): 279-298.

E. R. Moen, "Competitive Search Equilibrium," JPE 105 (1997): 385-411.

	Unemployment and Vacancies in Britain," Economic Policy 3 (1986): 676-690.
	O.J. Blanchard and P.A. Diamond, "The Beveridge Curve," Brookings Papers (1989): 1-60.

1. Employment Fluctuation and Reallocation

S.J. Davis, J. Haltiwanger, and S. Schuh, Job Creation and Destruction. Cambridge, MA: MIT Press (1996).

S.J. Davis and J. Haltiwanger, "Gross Job Flows," forthcoming in Ashenfelter and Card, eds. Handbook of Labor Economics, vol III. Amsterdam: North Holland, 1999.

	D. T. Mortensen and C.A. Pissarides, "Job Creation and Job Destruction in the Theory of Unemployment," Review of Economic Studies 61 (1994): 397-415.
	D.T. Mortensen, "The Cyclical Behavior of Job and Worker Flows," Journal of Economic Dynamics and Control 18 (1994): 1121-1142.

D.T. Mortensen and C.A. Pissarides, "Technical Progress, Job Creation and Job Destruction" (joint with C. A. Pissarides), Review of Economic Dynamics 1 (1998): 733-753.

1. Labor Market Policy

	R. Layard, S. Nickell, and R. Jackman, Unemployment. Oxford University Press, 1991.
	OECD Jobs Study. Paris: OECD, 1994.

	S.P. Millard and D.T. Mortensen, "The Unemployment and Welfare Effects of Labour Market Policy" in Snower and de la Dehesa (eds.), Unemployment Policy: How Should Governments Respond to Unemployment?, Oxford University Press (1996): 545-575.
	D.T. Mortensen and C.A. Pissarides, "Unemployment Responses to `Skill-Biased’ Shocks: The Role of Labor Market Policy," Economic Journal 109 (1999): 242-265.

D. T. Mortensen and C.A. Pissarides, "Taxes, Subsidies and Equilibrium Labor Market Outcomes" forthcoming in E. Phelps, ed., Subsidizing Low-Wage Employment. New York: Russell Sage Foundation, 1999.

1. Equilibrium Wage Dispersion

	P.A. Diamond, "A Model of Price Adjustment," JPE 3 (1971): 156-168.
	J.W. Albrecht and B. Axell, "An Equilibrium Model of Search Unemployment," JPE 92 (1984): 824-840.
	K. Burdett and K. Judd, "Equilibrium Price Distributions," Econometrica 51 (1983): 955-970.
	D.T. Mortensen, "Equilibrium Wage Distributions: A Synthesis" in Hartog, Ridder, a Theeuwes (eds.), Panel Data and Labor Market Studies, North Holland (1990): 279-296.

K. Burdett and D.T. Mortensen, "Wage Differentials, Employer Size and Unemployment," International Economic Review (1998): 257-273.

D.T. Mortensen, "Equilibrium Unemployment with Wage Posting", CLS Working Paper #98-14, Aarhus, DK, June 1998.

C. Bontemps, J-M Robin, and G.J. van den Berg, "Equilibrium Search with Continuous Productivity Dispersion: Theory and Non-Parametric Estimation", CLS Working Paper 98-07, University of Aarhus, August 1998 and forthcoming in the International Economic Review.