A model of learning in local labor markets is constructed in which the emphasis placed by employers on job applicants' employment histories induces workers to reject low nominal wages to avoid subsequently signalling a low ability. This 'wage censoring'behavior leads to inefficiently high levels...

We construct a search equilibrium model for a city with central and suburban labor markets that is consistent with the set of empirical regularities commonly associated with the spatial mismatch hypothesis: a higher rate of unemployment for central city residents than suburban residents, a...

This paper examines the contract between a risk-neutral firm and its risk-averse employees, assuming that worker ability is privately learned by the firm after a period of employment. Employers in an external spot labor market attempt to infer worker quality from the observable actions taken by...

The authors examine an endogenous growth model in which market frictions are an integral part of the economic environment. Workers invest in education when young, which raises their productivity once employed. The level of schooling also acts as a key determinant of the rate of economic growth...

This paper constructs a two-period macroeconomic model to analyze the implications of anticipated market reforms for the economic performance of a centrally planned economy (CPE). In the first period an excess demand for goods develops at prices set by central planners, forcing consumers either...