This paper measures mismatch between job-seekers and vacancies in the U.S. labor market. Mismatch is defined as the distance between the observed allocation of unemployed workers across sectors and the optimal allocation that solves a planner’s problem. The planner’s allocation...

We explore the optimal progressivity of the income tax system in an incomplete-markets model. Agents value private and public consumption and leisure, and are heterogeneous with respect to innate ability, idiosyncratic shock histories, and preferences. This heterogeneity generates a potential...

We develop a general equilibrium model in which employed and unemployed households devote a different amount of time to shopping. As in Mortensen and Pissarides (1994), unemployment is caused by the presence of search and matching frictions in the labor market. As in Burdett and Judd (1981),...