This paper examines the two-sided matching problem where the agents on each side of the market are heterogeneous and the matching process is time consuming. This is cast in a labor market setting where workers of different skills match with different machine qualities. I characterize the efficient allocation and then show that it can be decentralized by a market mechanism. The efficient assignm...

The natural rate of unemployment can be measured as the time-varying steady state of a structural vector autoregression. For post-War US data, the natural rate implied by this approach is more volatile than most previous estimates, with its movements accounting for the bulk of the variation in the unemployment rate, as well as substantial portions of the variation in aggregate output and inflat...

The KMG growth dynamics in Chiarella and Flaschel (2000) assume that wages, prices and quantities adjust sluggishly to disequilibria in labor and goods markets. This paper modifies the KMG model by introducing Steindlian features of capital accumulation and income distribution. The resulting KMGS(teindl) model replaces the neoclassical mediumand long-run features of the original KMG model by a ...

Past experiences and social forces have been incorporated into tastes in order to analyze various microeconomic issues. We use these “extended preferences” to model the making of standard-of-living aspirations and study their effect on macroeconomic variables. We concentrate first on consumption behavior when there is habit formation. Such behavior is in accordance with several empirical facts ...

A Editor I have from time to time in this column offered advice to authors on the desirable elements of a good research report. Like contrary children, for some authors such advice seems to vanish like smoke in a wind. So I take here a different approach, based on the idea that some folks have a knack for doing the opposite of what is recommended to them (like contrary children). I present some...

Human Capital and the Size Distribution of Firms Countries that have relatively fewer workers with a secondary education have smaller firms. The shortage of skilled workers limits the growth of more productive firms. Two factors influence the availability of skilled workers: i) the education level of the workforce and ii) large public sectors that predominantly hire individuals with a better ed...

Gender Differences in Job Separation Rates and Employment Stability: New Evidence from Employer-Employee Data I analyze the job separation process to learn about gender differences in job separation rates and employment stability. An essential finding is that employer-employee data are required to identify gender differences in job separation probabilities because of labor market segregation. F...

Why Are Similar Workers Paid Differently? The Role of Social Networks We provide a matching model where identical workers are embedded in ex-ante identical social networks. Job arrival rate is endogenous and wages are bargained. We study the evolution of networks over time and characterize the equilibrium distribution of unemployment rates across networks. We emphasize that wage dispersion aris...