Choices, Inequality and Welfare

COURSE OBJECTIVE
Choices, inequalities and welfare pursues a clear microeconomic policy approach. The objective of this course is to identify, justify, analyze
and evaluate policy options to various current economic problems, including issues in the fields of poverty and inequality, trade, climate
and environment, labor markets and social insurance, as well as competition policy for and regulation of product markets. Using problem
sets along with work on empirical economic data will increase and deepen understanding and help broach a large number of applied policy fields.

We pursue two types of learning outcomes:

ACADEMIC AND RESEARCH SKILLS
After successfully completing the course Choices, Inequality and Welfare, you are able:
- to formulate the economic rationale for policy intervention in various current economic problems;
- to develop policy options from economic theories;
- to apply tools of theoretical and empirical economic modeling;
- to interpret economic data.

BRIDGING THEORY AND PRACTICE
After successfully completing the course Choices, Inequality and Welfare, you are able:
- to discuss the role of economic policy in the context of both market failures and government objectives to adjust market outcomes;
- to evaluate existing and potential policy options, both in theory and in practice;
- to show a critical attitude to existing theoretical and empirical policy analyses of current economic problems.

COURSE CONTENT
This course is geared at understanding the role of government policy from a predominantly microeconomic perspective. Not only will
individual actors make choices that influence their own welfare, but government may pursue maximization of welfare for society as a whole. This course discusses the role of economic policy in the context of both market failures and government objectives to adjust market outcomes, including distributional aspects (inequality).

Microeconomic policy is on top of the agenda when it comes to keeping individual countries on the path to stability and growth. Microeconomic structural reforms (say, in labor and product markets, social security and welfare systems) are often seen as long-run policy measures, geared at structural and sustainable solutions, and are complementary to short-term macroeconomic stabilization policies.

Current structural economic problems arising in the following fields are prime candidates to be discussed:
• taking into account the trade-off between efficiency and equity when formulating policy goals in an interconnected world;
• measuring inequality of incomes and the role of distributional policy;
• development and trade: analysis of living standards and poverty, provision of legal and political frameworks, trade protection, WTO;
• environment: externalities from pollution, regulation and tax solutions; public goods and free rider behavior; climate policy challenges and trade effects;
• labor market allocation; labor supply responses to the tax and transfer system;
• social insurance and asymmetric information: disability insurance, moral hazard, welfare payments;
• competition policy and regulation: imperfect competition, market power, cartels, price-discrimination, regulation and de-regulation.

During the course, both theoretical and empirical economic work in policy context is discussed.

TEACHING METHODS
Lectures
Tutorials

TYPE OF ASSESSMENT
Course grade is average of problem sets (30%) and written examination (70%), with written exam grade of at least 5.0.

ENTRY REQUIREMENTS
We require basic knowledge of mathematics (differential calculus; high school level) and statistics,