The paper investigates the role of wealth distributions and financial institutions of an economy on within-industry firm heterogeneity in productivity. If there is no financial imperfection so that entrepreneurs are not constrained in borrowing, all of them make the same, optimal, productivity-enhancing investment. As a result, the industry will be composed of many homogeneous firms. If there e...

Increased integration of labour and capital markets creates significant challenges for the welfare states of modern Europe. Taxation of capital and labour that finances extensive programs of cash and in-kind redistribution creates incentives for capital owners and workers to locate in regions where they obtain favorable fiscal treatment. Competition among countries for mobile resources constrai...

Regional Unemployment and Human Capital in Transition Economies Differences in regional unemployment in post-communist economies are large and persistent. We show that inherited variation in human-capital endowment across the regions of four such economies explains the bulk of regional unemployment variation there and we explore potential explanations for this outcome through related capital an...