We study optimal dynamic Ramsey policies in a standard growth model with financial frictions. For developing countries with low financial wealth, the optimal policy intervention increases labor supply and lowers wages, resulting in higher entrepreneurial profits and faster wealth accumulation....

In a small open economy, financial frictions in the tradable sector justify a policy intervention which in the short run reduces wages and increases the supply of labor to this sector. Such a policy leads to faster entrepreneurial wealth accumulation, and less resource misallocation and higher...

Does lifecycle human capital accumulation vary across countries? If so, why? This paper seeks to answer these questions by studying U.S. immigrants, who come from a wide variety of countries but work in a common labor market. We document that returns to potential experience among U.S. immigrants...

This study uses newly available large-sample micro data to document that the wage increase associated with increasing worker experience is lower for poorer countries. By taking this fact into account when calculating aggregate human capital, we find that human capital can explain a substantially...

I study the implications of the limited enforceability of credit contracts for inequality and economic growth. I introduce limited enforcement into a deterministic neoclassical growth model. Two types of agents differ in their initial wealth, ability and patience and each operate a private firm....

Individuals' time allocation decisions depend on the distribution because the productivity levels of others determine their own chances of improving their productivities through search. The time allocations of everyone in the economy in turn determine the evolution of its productivity...

We study a class of continuous time heterogeneous agent models with idiosyncratic shocks and incomplete markets. This class can be boiled down to a system of two coupled partial differential equations: a Hamilton-Jacobi-Bellman equation and a Kolmogorov Forward equation, a system that Lasry and...

Using recently available large-sample micro data from 36 countries, we document that experience-earnings profiles are flatter in poor countries than in rich countries. Motivated by this fact, we conduct a development accounting exercise that allows the returns to experience to vary across...

Using recently available large-sample micro data from 36 countries, we document that experience-earnings profiles are flatter in poor countries than in rich countries. Motivated by this fact, we conduct a development accounting exercise that allows the returns to experience to vary across...

Market failures provide a rationale for policy intervention. But policies are often hard to alter once in place. We argue that this inertia can result in well-intended policies having sizable negative long-run effects on aggregate output and productivity. In our theory, financial frictions...