<<AB HEADS, REFERENCES>> <<WORDS: 12,353; CH: 85,323>> 23. Behavioral Labor Economics

Behavioral economics has in recent decades emerged as a prominent set of methodological developments that have attracted considerable attention both within and outside the economics profession. The time is therefore auspicious to assess behavioral contributions to particular subfields of economics such as labor economics. With empirical validity among its chief objectives, one might guess that behavioral economics would have made its clearest mark in data-driven subfields such as labor economics. It has been more theoretical subfields, however, that have led much of the recent behavioral movement, drawing on laboratory data for its empirical basis as opposed to the large panels of field observations common in labor economics. Motivated in part by the question of why labor economics has been a relatively slow adopter of behavioral theory, this essay surveys a wide range of behavioral studies that address core labor issues. The objective of the survey is to construct a map of areas within labor economics in where behavioral methods have already produced new insights, in hopes that the existing literature (and the gaps therein) will suggest new directions for future applications of behavioral concepts. Comparison and contrast of neoclassical versus behavioral methods and the consequences of those methodological differences provide the map's relief, bringing high and