This paper explores the rationale for unemployment beneÞts as a complement to optimal non-linear income taxation. High-skilled workers and low-skilled workers face different exogenous risks of being unemployed. As long as the low-skilled workers face a higher unemployment risk, we Þnd that there is a case for over-insuring the lowskilled, hence the unemployment beneÞts of the low-skilled should...

This paper investigates the local labor supply effects of changes to the minimum wage by examining the response of low-skilled immigrants' location decisions. Canonical models emphasize the importance of labor mobility when evaluating the employment effects of the minimum wage; yet few studies address this outcome directly. Low-skilled immigrant populations shift toward labor markets with stagn...

This paper presents a model which captures the technological spillovers created by foreign direct investment in Transition Economies. Skill-biased technological change is linked with endogenous labor supply which allows for unemployment. The technological spillover is divided into a neutral technological change and a skill-biased technological change. The first effect makes labor and capital mo...

Labor Market Institutions, Wages, and Investment Labor market institutions, via their effect on the wage structure, affect the investment decisions of firms in labor markets with frictions. This observation helps explain rising wage inequality in the US, but a relatively stable wage structure in Europe in the 1980s. These different trends are the result of different investment decisions by firm...

Deindustrialization and the decline of Fordism have undermined the economic complementarities that existed between skilled and semi-skilled workers. The result has everywhere been a decline in coordinated wage bargaining and unionization rates, and a notable rise in labor market inequality. Yet, the political responses have been very different. In some countries rising inequality has been exace...