This paper investigates a learning model in which information about a worker's ability, unobserved to both the worker and the firm, can be acquired in any period by both parties by observing the worker's performance at a given task. Tasks are differentially informative about productivity: more...

We argue that the main difference between European and American labor markets is not so much in the unemployment rates, but maybe more importantly in the reduced flows into and out of unemployment, in Europe. Employment protection legislations (EPL) have been extensively studied in the...

This paper explores the implications of culturally biased testing for the employment decisions of firms. Only the workers know whether they can do the job or not so firms test them. Wages are made contingent on the test results which are public information. The threshold result for hiring...

Shimer (2005) showed that a standard search and matching model of the labor market fails to generate fluctuations of unemployment and vacancies of the magnitude observed in US data in response to shocks to average labor productivity of plausible magnitude. He also suggested that wage...

This paper studies amplification of productivity shocks in labor markets through on-the-job-search. There is incomplete information about the quality of the employee-firm match which provides persistence in employment relationships and the rationale for on-the-job search. Amplification arises...