When a government cannot commit to future policies, investors face the risk of opportunistic behavior in addition to uncertain market conditions. We show that although reducing market uncertainty is sometimes essential for investment, it may aggravate problems of opportunism. The better informed...

Are competitive wage premia an obstacle to growth? The answer of the architects of the Scandinavian 'model' in the 1950s and 1960s was in the affirmative. By punishing expansive and growth enhancing sectors of the economy, competitive wage premia imposed an unwarranted drag on the rate of...

We analyse the question of optimal taxation in a dual economy, when the policy-maker is concerned about the distribution of labour income. Income inequality is caused by the presence of sunk capital investments, which creates a "good jobs" sector due to the capture of quasi-rents by trade...

The authors consider a noncooperative model of a family's time allocation between market work and providing a home-produced family public good (such as child care or care for the elderly). The model predicts underprovision of the public good. Because of crowding out, this does not necessarily...