We show that a minimum wage can have large effects throughout the earnings distribution, using a combination of theory and empirical evidence. To this end, we develop an equilibrium search model featuring empirically relevant worker and firm heterogeneity. We use the estimated model to evaluate...

This short note discusses the role of employer heterogeneity as a driver of growth and earnings inequality across the world. Policy implications are discussed.

The objectives of this study are three-fold. The first is to rebut Charles Kindleberger’s famous dictum that usury ‘belongs less to economic history than to the history of ideas’; and in particular to demonstrate that the resuscitation of the anti-usury campaign from the early 13th century...

The aim of this essay is to show how sustained growth in the employment rate, which should be taken as a strategic variable of economic policy, depends - for given growth rates of output and working age population - on two conditions: (a) allowing working hours to decline at the same rate at...

The law proposal on the reduction of the working week submitted to the Italian Parliament provides an opportunity for a critical and constructive reflection on the role that a reduction of standard working time can play in pursuing the goal of increasing and maintaining a high employment rate....

Expenditures on healthcare and employment in the healthcare sector have been steadily increasing across OECD countries for many years. This shift of expenditure and employment towards a consistently found to be less productive sector has often been associated with the idea of Baumol’s (1967)...

This paper investigates the relationship between income inequality and aggregate demand. It is shown empirically, that increases in income inequality are associated with decreased aggregate consumption. The analysis reveals a systematic difference in the relationship between income inequality...

This paper analyzes the relationship between demographic change and automation while taking the role of education into account. This is illustrated by incorporating skilled and unskilled labor into a theoretical model. If labor supply by households decreases, for example, due to demographic...

Using the consumption equivalent welfare gain as social welfare and assuming an automation technology shock, we derive the optimal tax rates for various tax policy instruments in the steady state of the model economy calibrated for the U.S. We find that the optimal capital income tax rate lies...

In contemporary Japan, the realization of a virtuous cycle of growth and distribution (i.e., how the "new form of capitalism" should be) has been discussed. To examine the validity of economic policies suggested by the new form of capitalism, we present a Kaleckian model that considers the wage...