We consider the search behaviour of an infinite lifetime worker whose expected matching gains are assumed to be decreasing over the spell of unemployment. The search effort is linked positively to future earnings and negatively to the worker's reservation wage. We show that this may give rise to...

This paper examines how the accumulation of human capital determines both a country's growth rate and income inequality . In contrast to previous work, we do not rely on credit market imperfectionf or political economy arguments. The insight of this model is that inequality is determined by the...

A simple model of the Arrow-Debreu type is used to analyze the short-run performance of an employee-controlled wage-maximizing economy. It is found that an increase in demand, caused by a shift in consumers' preferences, leads to a fall in a good's equilibrium price, which indicates that...

The paper proposes a simple mechanism, also applicable to certain models of internal bargaining, that induces firms to eliminate practically all efficiency losses and to react normally to changes in exogeneous variables.

Management and a union bargain sequentilally, first choosing a contract which will later determine the level of employment, and then choosing a wage. The government then chooses an output subsidy, after which the industry chooses employment according to the contract. The presence of a natural...