This paper presents a theory explaining the labor market matching process through microeconomic incentives. There are …

within education groups, our theory helps to explain (1) rising wage inequality between groups, and (2) rising wage …

interplay between nominal frictions and money growth. When the money supply grows in the presence of price inertia (due to … staggered wage contracts with time discounting), the price adjustments to each successive change in the money supply are never … these shocks also generate plausible impulse-responses for unemployment. Although our theory contains no money illusion, no …