Structural Policy

COURSE OBJECTIVE
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 labor markets, social insurance, pensions, development, trade, environment and product market competition. Using problem sets and exercises, along with work on economic data will increase and deepen understanding and help broaching a large number of microeconomic policy fields.

Specific learning outcomes upon completion of this curricular item are:
(i) students are able to formulate the economic rationale for policy intervention in various current economic problems, developed from insights based on economic theories;
(ii) students are able to evaluate existing and potential policy options, both in theory and in practice;
(iii) students can apply tools of economic modeling and are able to interpret economic data;
(iv) students show a critical attitude to existing theoretical and empirical policy analysis of current economic problems.

COURSE CONTENT
Structural 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 complementary to short-term macroeconomic stabilization policies.

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.

Current structural economic problems arising in the following fields are prime candidates to be discussed:
• labor market allocation; labor supply responses to the tax and transfer system;
• development and trade: analysis of living standards and poverty, inequality, provision of legal and political frameworks, trade protection, WTO;
• environment: externalities, property rights, tragedy of the commons, environmental taxation, climate policy;
• social insurance and social security: disability insurance, moral hazard, welfare payments, pensions (social security), adverse selection;
• 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
Grade is average of problem sets (30 %) and written examination (70%), with written exam grade of at least 5.0.

ENTRY REQUIREMENTS
Basic knowledge of math and statistics, as provided in the academic core of any academic program at Vrije Universiteit Amsterdam or equivalent.

RECOMMENDED BACKGROUND KNOWLEDGE
The course builds on a previous courses in the Minor Economics program, in particular, Foundations of Microeconomics. Familiarity with contents of that course is assumed. Familiarity includes a working knowledge of how to apply economic models in context and how to select and use appropriate graphical tools of analysis.