This paper examines how economic stratification affects inequality and growth over time. It studies economies where heterogenous agents interact through local public goods or externalities (school funding, neighbourhood effects) and economy-wide linkages (complementary skills, knowledge...

This paper derives a model in which workers have firm-specific and industry-specific skills, and in each period there is a non-zero probability that a worker quits. This makes the private discount factor, used by firms in making decisions about hiring and training new workers and firing existing...

We investigate two dimensions of investment in general human capital on-the-job: the number of workers trained and the intensity of training for each worker. In the benchmark case, we consider wage and training decisions made by firms in an imperfectly competitive labour market. The benchmark...

The distribution of human capital and income lies at the center of a nexus of forces that shape a country’s economic, institutional and technological structure. I develop here a unified model to analyse these interactions and their growth consequences. Five main issues are addressed. First, I...

This paper develops a simple model of human capital accumulation and community formation by heterogeneous families, which provides an integrated framework for analysing the local determinants of inequality and growth. Five main conclusions emerge. First, minor differences in education...