This paper examines the extent to which intergenerational links through transfers of wealth and investment in human capital might help in accounting for the wealth inequality observed in U.S. data. We examine an overlapping-generations heterogeneous agents economy with idiosyncratic risk and...

We first scrutinize and challenge Prescott's (2002, 2004) quantitative analysis of the role of differences in taxes in explaining cross-country differences in labor market outcomes, and then defend an alternative model that assigns an important role to cross-country differences in social...

We consider an efficiency-wage model with the Calvo-type sticky prices and analyze optimal monetary policy when unemployment insurance is not perfect. With imperfect risk sharing, strict zero-inflation policy is no longer optimal even if the zero-inflation steady-state equilibrium is assumed to...

We study the structure of optimal wedges and wealth taxes in a Mirrleesian economy with endogenous skills. Human capital is a private state variable that drives the skill process of each individual. Building on the findings of the labor literature, we assume that human capital investment is a)...

College attainment differs nearly two-fold across U.S. states. This paper shows that highly educated states employ skill-biased technologies, specialize in skill-intensive industries, but do not pay lower skill premia. A theory based on agglomeration economies is developed to account for these...

This paper explores wage-setting in the presence of asymmetric information. Firms know their own productivity, while workers only know the distribution of productivity in the economy. Although there is unemployment in equilibrium, the labor market is competitive in the sense of Moen (1997):...

Several recent papers (Shimer 2003a, 2003b; Costain and Reiter 2003; Hall 2003) have shown that general equilibrium labor market models have a hard time generating the degree of cyclical volatility in unemployment and vacancies that is observed in the data. These papers have suggested that rigid wages...