The Levy Institute Microsimulation Model (LIMM) is a tool used for policy simulations to estimate ex-ante the employment and income effects of sectoral investments. In Istenes (2023), a simple implementation of the LIMM for New York State initially had difficulty producing realistic conditional...

As technological advances accelerate and labour demands shift, the ability of workers to reallocate across occupations will be crucial for shaping labour market dynamics, inequality, and effective policy design. In this paper, we develop a tractable equilibrium model of the labour market that...

What motivates individuals to become entrepreneurs and create jobs? We develop and estimate a dynamic structural microeconometric model that accounts for both employer and non-employer entrepreneurs. Individuals in each period choose to work as an employee, as one of the two entrepreneur types,...

This chapter reviews the theory of monopsonistic wage setting, its empirical implications, and some puzzles the framework has struggled to explain. We begin by examining the fundamentals of monopson- istic wage determination. The core of the theory is a mapping from the distribution of worker...

A growing body of research in economics shows that workers care about more than just pay, often seeking social status, career mobility, or meaningful work. This chapter introduces the work orientations framework-a concept from psychology - as a unifying lens for understanding these motivations....

Using register data, we document that the average German labor market, defined by hires in combinations of 3-digit occupations, requirement levels, and commuting zones, is highly concentrated (HHI=0.257). By EU antitrust thresholds, 56 percent of these labor markets feature moderate or high...

In 2024, Austria's economic output shrank for the second year in a row (–1.2 percent). Companies suffered from weak demand at home and abroad, high energy prices and comparatively high unit labour costs. Private consumption declined despite rising real incomes. Manufacturing remained in...

Labour turnover is a crucial element of contemporary economic life. It can improve productivity if more productive workers replace less productive ones. However, in the short run, it generates sizeable labour adjustment costs (LACs), including productivity losses. This paper sheds new light on...

This study estimates and decomposes recruitment elasticity, a key measure of employer market power, across job-matching stages using data from Japan's largest job-matching intermediary. On average, recruitment elasticity is negative but not statistically significantly different from zero....

This paper explores the role of employment pool composition on labor matching effectiveness in ten Central and Eastern European countries from 2005 to 2023. We control for the structure of the labor force in terms of education, age, and gender. The results point towards a significant impact of...

Whereas labor markets are traditionally viewed as machine-like environments - where agents, coordinated by price signals, solve constrained optimization problems or adhere to established heuristics - this paper views labor markets as human ecosystems, containing living things, namely, the human...

Shimer documents that the search-and-matching model driven by productivity shocks explains only a small share of the observed volatility of unemployment and vacancies, which is known as the Shimer puzzle. We revisit this evidence by replacing the representative firm's optimization with a deep...

We develop a tractable equilibrium model of the labour market, featuring heterogeneous labour supply elasticities across occupations that can be estimated in a baseline period using observed worker flows. We use this model to study the heterogeneous impact of subsequent demand shifts on wages...

This paper develops the nonparametric identification of models with production complementarities, worker-firm specific disutility of labour and search frictions. Mobility in the model is subject to preference shocks, and we assume that firms can write wage contracts. We develop a constructive...

Labor economics often assumes that wages w are equal to the marginal revenue product of labor MRP L. However, recent literature has shown that firms' market power allows them to pay wages substantially below marginal productivity. The markdown (MRP L - w)/w is our preferred measure of firms'...

We model monopsony on the labor market using a separable matching model a la Choo and Siow (2006). We propose a simple method that estimates 1) the multidimensional determinants of productivity and non-wage preferences separately and 2) the variance of unobserved heterogeneity on both sides of...

Minimum wages decrease employment in competitive markets, but can increase it in monopsonistic markets so long as they do not exceed the marginal product of labour. We find evidence of non-monotonicity both by market structure and minimum wage level. Minimum wage hikes initially increase hours...

We develop a model in which large risk-neutral firms and individual risk-averse consumers compete to employ heterogeneous workers by posting compensation menus. Production takes time, and we analyze how screening motives interact with the desire to smooth consumption. There is a unique symmetric...

We develop a model in which large risk-neutral firms and individual risk-averse consumers compete to employ heterogeneous workers by posting compensation menus. Production takes time, and we analyze how screening motives interact with the desire to smooth consumption. There is a unique symmetric...

Economists increasingly refer to monopsony power to reconcile the absence of negative employment effects of minimum wages with theory. However, systematic evidence for the monopsony argument is scarce. In this paper, I perform a comprehensive test of this argument by using labor market...