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Chapter 3
Competitive equilibrium
In this chapter we will:
 Describe the basic model of the labor market in competitive equilibrium
 See how the analysis of interactions between supply and demand offers insight into the problem of fiscal incidence
 See how the interactions between supply and demand allow us to estimate the elasticity of labor demand. Apply this strategy using data and programs allowing us to replicate the main results of the paper of Acemoglu, Autor, and Lyle (2004) that uses the instrumental variable method to estimate the elasticity of labor demand in a consistent way
 Understand why, in a situation of perfect competition, the hedonic theory pre dicts that wage differentials compensate for the laboriousness or danger of tasks
 Provide evaluations of the value of statistical life
 Understand how the assortative matching model shows that very small differences in talent can lead to huge remuneration differentials
 Use the assortative matching model to explain the soaring remuneration of superstars and chief executive officers (CEOs)
Reproducing the figures and the main results
Teaching slides
 Presentation Title
 author
 Creation date

 Competitive equilibrium
 José Ignacio García Pérez
 07/07/2014

 Fixation des salaires
 Remi Bazillier
 08/08/2014