This paper examines the development of wage inequality in the context of a Burdett- Mortensen (1998) model that is extended to incorporate worker heterogeneity through skill requirements in the production process. In this environment, wage dispersion is a natural consequence of firms pursuing...

Property transaction taxes-also known as stamp duty-are widely viewed as an inefficient form of taxation. In this paper, we examine the welfare implications of removing stamp duty in a general equilibrium overlapping generation model with heterogeneous agents. Our model features an idiosyncratic...

We consider a model of innovation that distinguishes between ideas and innovations. While innovation responds to incentives, ideas are a scarce resource that provide an exogenous constraint on the rate of innovation. We investigate how the optimal reward structure is shaped by the scarcity of...