This paper provides a theory of government intervention, such as government ownership, regulation, mandatory public schooling, subsidies, and industrial policy, as an optimal policy response due to the inability to commit not to expropriate private investment or bail agents out. If the...

This article complements the structural New-Keynesian macro framework with a no-arbitrage term structure model. Whereas our methodology is general, we focus on an extended macro-model with an unobservable time-varying markup and stochastic risk aversion. Term structure information helps to...

The purpose of the paper is to study the effects of labor market policies on the equilibrium rate of growth in the Grossman-Helpman model. For that purpose, the version of the their model developed by Klette and Kortum to explain the distribution of firm size is extended to allow for both...

We study the impact of three different types of policy on the sectoral composition of employment and on the overall level of market employment: (1) regulations that reduce the efficiency of market production, such as administrative burdens on companies, (2) income transfers across population...

We develop a lifecycle human capital investment model in an overlapping generations environment. Investments in human capital can be made at different ages and are subject to different constraints on the individual and family. We explore empirical evidence on the complementarity of investments...

Every month thousands of people become employed or unemployed. In the same month thousands of people decide to enter or exit the labor force. Although most of the literature focuses primarily on job flows, several recent empirical and theoretical studies suggest that, in order to completely...

This paper examines the business cycle properties of business cycle models with search frictions and wage bargaining which rely not only on labor, but also on capital in the production function. In the presence of capital, the choice of bargaining framework matters, even under perfect...

We present a tractable equilibrium job search model of individual worker careers allowing for human capital accumulation, employer heterogeneity and individual-level shocks. We estimate our structural model on a panel of Danish matched employer-employee data and use it to analyze the...