We estimate a standard human capital earnings model, augmented to allow for different firmspecific wage premia. The earnings of an individual depend on her human capital bundle and the earnings mark-up of the firm she is currently working for. We use linked employer-employee data from Norway which allows us to directly estimate the skill premium as a function of firm specific variables such as ...

A competitive search model of the labor market is embedded into a small open economy with firm and worker heterogeneity. Search frictions generate equilibrium unemployment and income inequality between identical workers, in addition to income differences between skill groups. Numerical simulations of the model reveal that an increase in trade is likely to increase within-group inequality and de...

We model a labor market in which workers' level of education might be a signal of skills. We show that whenever the wage premium for education increases over time – as it might happen under skill biased technological progress – the investment in education needed to sustain a separating equilibrium in which skilled workers perfectly signal their type, also increases. Hence, an increase in the ed...

In this paper we develop a theory of how factors interact at the plant level. The theory has implications for (1) the micro foundations for capital-skill complementarity, (2) the relationship between factor allocation and plant size, and (3) the effects of trade and growth on the skill premium. The theory is consistent with certain facts about factor allocation and factor price changes in the 1...

We construct a general equilibrium version of the Krusell et al. Econometrica 68, 1029, 2000 model with capital–skill complementarity. We assume several sources of growth simultaneously: exogenous growth of skilled and unskilled labour, equipment-specific technological progress, skilled and unskilled labouraugmenting technological progress and Hicks-neutral technological progress. We derive res...

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...

Some scholars have attributed earnings differences among locations to labor market conditions (“place effects”) whereas others have focused on the skill level of residents (“person effects”). We estimate a variety of selection models in an effort to detect differences in labor market conditions while controlling for differences in skill levels. We maintain the assumption that there are no barri...