Distinguishing between the relative roles of skills and luck in the determination of wages is a main concern for economic policy. Variation in observed characteristics of workers and firms typically account for one third of total variance in wages in the US. Luck, as a result of frictions in the...

We consider a competitive equilibrium matching model where technological progress is embodied in new jobs. Jobs are slowly created over time and in equilibrium there is dispersion in job technologies. Workers can be employed in at most one job. They decide on whether to participate in the labor...