We estimate a semiparametric dynamic panel data model by the local linear kernel method and we interpret the slope of the nonparametric component function as a varying slope coefficient. Thus, the slope coefficient is a smooth, but otherwise unknown, function of some of the regressors. A Monte Carlo experiment is reported to examine the finite sample performance of the local linear estimator. W...

Why do some vacancies offer a posted wage whereas others offer a negotiable wage? The paper endogenizes the choice of wage policy in a search model with heterogeneous workers. In particular, we characterize the circumstances under which there exist an equilibrium where all firms negotiate wages. Generally, we find that a tight labor market favors bargaining over posting, as does large worker he...

A distinctive contribution of the unemployment model of Diamond, Mortensen, and Pissarides is the creation of an economically coherent concept of labor-market tightness. In a tighter market, jobseekers find jobs more quickly and employers take longer to fill jobs. The evidence in this paper on individual job-finding rates and on job-filling rates of employers shows that a single index factor de...

It has long been understood by welfare researchers that the welfare caseload is quite diverse. Heterogeneity has assumed particular importance in the welfare reform environment of the 1990s because welfare recipients with different characteristics are likely to have different capacities for responding to work-oriented reform. This paper constructs measures of heterogeneity based on the recipien...

We use labor market data and data on price changes to examine the role of structural duration dependence and heterogeneity in shaping aggregate hazard rates. In line with an extensive literature, we examine this question through the lens of the proportional hazard model. We focus on environments where we observe two observations per individual, as this not only allows us to estimate the model n...

We derive asset-pricing and portfolio-choice implications of a dynamic incomplete-markets model in which consumers are heterogeneous in several respects: labor income, asset wealth, and preferences. In contrast to earlier papers, we insist on at least roughly matching the model’s implications for heterogeneity—notably, the equilibrium distributions of income and wealth—with those in U.S. data. ...