This paper develops a two-sector general equilibrium model in which firms in the primary economy have to create workplaces prior to production and product market competition. For this, we introduce the endogenous sunk cost approach with two-stage decisions of firms from IO in the macro-labor...

In this paper we study how promoting product market competition by reducing mark-ups or by increasing productivity are able to complement labor market reforms. We use a simple general equilibrium model with different types of labor. The bottom-line of the paper is that product market reforms...

In closed or open economy models with complete markets, targeting core inflation enables monetary policy to maximize welfare by replicating the flexible price equilibrium. We analyze this result in the context of developing economies, where a large proportion of households are credit constrained...

We develop a product market theory that explains why firms invest in general training of their workers. We consider a model where firms first decide whether to invest in general human capital, then make wage offers for each others' trained employees and finally engage in imperfect product market...

This paper investigates how families make decisions about the education of juveniles. The decision problem is analyzed in three variations: a 'decentralized' scheme, in which the parents control the purse-strings, but the children dispose of their time as they see fit; a 'hierarchical' scheme,...