In environments where agents face uninsurable idiosyncratic income shocks, it is well-known that progressive taxation can potentially provide extra insurance and may, hence, improve welfare. However, if taxes distort individual incentives or cannot be conditioned on all relevant individual...

In this paper we study the impact of moral hazard in labor contracts on the cross-sectional wage distribution, in particular, its effect on the extent of residual wage inequality. The tool of our analysis is a search model with job-to-job mobility and firm competition for workers. In our...

It is well known that hours per working-age person in continental Europe have shown a rather different time series pattern than in the US. While in 1970, hours per working-age person were similar, they subsequently fell in continental Europe but did not show a clear trend in the US. Strikingly,...

This paper studies the life-cycle dynamics of individual job mobility. After entry into the labor market, young individuals typically change jobs very frequently and retain new jobs just for a short period of time. In later stages of their career, workers tend to hold stable jobs and they are...

Starting in the late 1970s, European unemployment began to increase while US unemployment remained constant. At the same time, capital-embodied technical change began to accelerate, and the United States adopted the new capital much faster than Europe. I argue that these two facts are related....

This paper aims at analyzing the implications of individuals’ consumption jealousy on the dynamic structure of a two-sector model economy. We find that status-seeking substantially influences both, the long-term properties and the adjustment behavior of the model. Depending on the status...

The divergence of unemployment rates between the U.S. and Europe coincided with a substantial acceleration in capital-embodied technical change in the late 70’s. Furthermore, evidence suggests that European economies have been lagging behind the U.S. in the adoption and usage of new...

Globalization features one of the major global trends which shape economic outcomes in developing and developed countries. Standard results from the empirical growth literature suggest that participation in worldwide trade is an important determinant of economic growth. In contrast to previous...

This article employs a dynamic general equilibrium model to study the implications of a nonstandard preference structure for the short-run dynamics of the economy. Preferences in this model are assumed to contain comparison elements for consumption and leisure, i.e. agents care about how their...

We propose a stylised dynamic model to understand the role of social networks in the phenomenon we call "globalization." This term refers to the process by which even agents who are geographically far apart come to interact, thus being able to overcome what would otherwise be a fast saturation...