Steven Weinberg (2018) says: (1) new theories that target new observations should be constrained to agree with observations successfully represented by existing theories; and (2) preserving successes of earlier theories helps to discover unanticipated understandings of yet other phenomena....

We develop a theory of labor markets in a monetary economy with four realistic features: search frictions, worker productivity shocks, wage rigidity, and two-sided lack of commitment. Due to the non-Coasean nature of labor contracts, inefficient job separations occur in the form of endogenous...