Using a matched worker-plant data from Finnish manufacturing, the relationships of worker characteristics, wages, and productivity are examined. The process of linking various registers on employees and plants is described in detail. The final data set includes the characteristics of plants and...

In many economic and social contexts, individuals can undertake a transaction only if they are `linked' or related to each other. We take the view that these links are costly, in the sense that it takes effort and resources to create and maintain them. The link formation decisions of the players...

This paper examines the evolution of labor earnings inequality in an environment where individuals learn about their own ability (productivity) from wage realizations. It is shown that innate ability heterogeneity and idiosyncratic income shock variance have distinct effects on the emergence of...

Within an incomplete contract framework, we analyze the enlargement strategy of a club facing applicants that differ in wealth and reform status. While an applicant benefits from entry, the club only gains if the entrant makes an adjustment investment. The club has a choice between early...

We study an economy where agents are subject to liquidity demand shocks, and banks arise endogenously to insure consumers against these shocks. In this environment we evaluate the desirability of a lender of last resort who can provide liquidity loans to banks in distress. In the absence of a...

No abstract.

Are people concerned with their relative standing in a reference group? Do certain types care more about this than others? Little work has been done to identify underlying determinants for an inclination to make social comparisons and to explain variation across individuals. We investigate...

We incorporate strategic complementarities into a multi-agent sequential choice model with observable actions and private information. In this framework agents are concerned with learning from predecessors, signalling to successors, and coordinating their actions with those of others....

This paper proposes a new nonparametric estimator for general regression functions with multiple regressors. The method used here is motivated by a remarkable result derived by Kolmogorov (1957) and later tightened by Lorentz (1966). In short, any continuous function f(x_1,...,x_d) has the...

No abstract.