Educational Self-Selection, Tasks Assignment and Rising Wage Inequality This paper presents a general equilibrium assignment model of workers to tasks with endogenous human capital formation and multidimensionality of skills. The model has 2 key features. First, skills are endogenous and multidimensional. Second, two types of assignment occur, workers self-select their education and firms assig...

When labor incomes approach subsistence levels, the labor supply curve slopes outward, because the fight for survival mandates households to look for longer work hours in response to falling wage rates. We explore conditions under which near-subsistence scenarios may imply wage traps, labor market failures that can be the cause of undernourishment, illiteracy, and child labor. After stating gen...

Do Legal Standards Affect Ethical Concerns of Consumers? In order to address the impact of regulation on ethical concerns of consumers, we study the effect of a minimum wage. In our experimental market, consumers have monopsony power, firms engage in Bertrand competition, and workers are passive recipients of a wage payment. Two treatments are employed, one with no minimum wage in the first par...

This paper examines the role of international trade for job polarization, the phenomenon in which employment for highand low-wage occupations increases but mid-wage occupations decline. With employer-employee matched data on virtually all workers and firms in Denmark between 1999 and 2009, we use instrumentalvariables techniques and a quasi-natural experiment to show that import competition is ...

A challenge facing labor economists is to explain the existence of different wage-setting mechanisms. This paper investigates the relative efficiency of competitive wage, wage bargaining and wage posting. In a search-theoretical model with human capital investment we establish the conditions, which are associated to the cost structures of human capital investment and job vacancy creation, for o...

In this paper, we decompose city size wage premia into various components. We base these decompositions on an estimated on-the-job search model that incorporates latent ability, search frictions, firm-worker match quality, human capital accumulation and endogenous migration between large, medium and small cities. Counterfactual simulations of the model indicate that variation in returns to expe...

Psychologists have consistently documented people’s tendency to be overconfident about their own ability. We interpret workers’ confidence in their own skills as their morale, and investigate the implication of worker overconfidence on the firm’s optimal wage-setting policies. In our model, a wage contract both provides incentives and conveys to the worker the firm’s opinion about her ability, ...