We develop a labor demand model that encompasses pre-match hiring cost arising from tight labor markets. Through the lens of the model, we study the effect of labor market tightness on firms' labor demand by applying novel shift-share instruments to the universe of German firms. In line with...

This paper surveys major empirical regularities concerning changes in earnings inequality in Europe and the U.S. over the past 25 years. Next, it indicates which of these regularities can be explained within the competitive demand-supply framework of analysis and what is left unexplained....

One of the central topics in recent empirical work on subjective well-being is that of comparisons to a reference group, over a variety of domains of economic and social life. One such reference group is neighbours. Any resulting spatial spillovers that are identified have potential implications...