Recent research documents mounting evidence for sizable and persistent biases in individual labor market expectations. This paper incorporates subjective expectations into a general equilibrium labor market model and analytically studies the implications of biased expectations for wage...

The divergence of unemployment rates between the United States and Europe coincided with a substantial acceleration in capital-embodied technical change in the late 1970s. Evidence suggests that European economies have lagged behind the United States in the adoption and usage of new...

Recent research documents mounting evidence for sizable and persistent biases in individual labor market expectations. This paper incorporates subjective expectations into a general equilibrium labor market model and studies the implications of biased expectations for wage bargaining, vacancy...