Select a normative policy question.
• The question needs to pertain to the labor market, broadly defined.
• The policy must not be one that we discussed in detail in class.
• The question needs to be normative, i.e. containing the word “should.”
• The question should be focused and specific to a country, e.g. “Should the minimum
wage be raised in the US?” rather than “Should the minimum wage be raised?” or
“What should be the minimum wage?” You can pick any country.
• The question can be something under debate right now, something that has been
under debate in the past, or something that you think should be on the policy agenda.
2. Provide institutional detail on the policy in question in the country you chose. If
applicable, provide background on the policy debate. Explain why you think the policy
question is important.
3. Describe the costs and benefits of the policy change under consideration.
4. Analyze the effects of the policy using the economic model(s) developed in class. Your
analysis has to contain at least one graph and/or equation.
5. Discuss what is known empirically about the effects of the policy. I do not expect you to
conduct empirical analysis of your own, but instead search for existing articles on the
topic and find out what is known in the literature.
6. Summarize what you have learned about the pros and cons of the policy (in other words,
whether the benefits outweigh the costs or vice versa). If the existing information is
inconclusive, what additional evidence would you need to be able to draw a conclusion?
The paper will be graded based on the presence and quality of the above 6 items.
The paper may be at most 10 pages.
The paper may be done individually or in groups of 2. If the paper is done in a group of 2,
both students will receive the same grade for the paper. Clearly indicate the names of both
students on the paper.
