We build an analytically and computationally tractable stochastic equilibrium model of unemployment in heterogeneous … labor markets. Facing search frictions within markets and reallocation frictions between markets, workers endogenously … that occupational change of unemployed workers is procyclical. The heterogeneous-market model yields highly volatile …

Workers wrongly anchor their beliefs about outside options on their current wage. In particular, low-paid workers … underestimate wages elsewhere. We document this anchoring bias by eliciting workers’ beliefs in a representative survey in Germany … particularly pronounced among workers in low-wage firms. If workers had correct beliefs, at least 10% of jobs, concentrated in low …

employed workers in competitive labor markets. The reason is that employers may not comply with the minimum wage legislation … and instead pay a lower subminimum wage rate. If workers are risk neutral, we prove that working hours and welfare are … invariant to the minimum wage rate. If workers are risk averse and imprudent (which is the empirically likely case), then …

Sick workers in many countries receive sick pay during their illness-related absences from the workplace. In several … countries, the social security system insures firms against their workers' sickness absences. However, this insurance may create … blue-collar workers' sickness absences was abolished (firms did not receive a similar refund for their white-collar workers …

labor in favor of employing free skilled workers, thereby incentivizing the masses to engage in broad-based human capital …

that if workers grow older there is an increasing gap between productivity and wages, i.e. wages increase with age while …

We investigate the role of workers' and managerial experience as a determinant of firm innovation and productivity in a … sample of Italian manufacturing firms. A high share of temporary - thus un-experienced - workers is associated to low …

making contracting decisions, employers should take into account that workers are heterogenous with respect to both their … measures of workers' productivity and trustworthiness and make this information available to potential employers. Our data show … that employers pay significant wage premia for both traits. Firms make highest profits with trustworthy workers, in …