In this paper we analyse educational choices and earnings of individuals at two different levels in the Portuguese educational system. At each potential exit level we consider two decisions: the decision to continue studying and the employment decision, whereas normally only the first decision...

We extend the Lucas' 1988 model introducing two classes of agents with heterogeneous skills, discount factors and initial human capital endowments. We consider two regimes according to the planner's political constraints. In the first regime, that we call meritocracy, the planner faces...

We propose and estimate a model where unemployment fluctuations result from self-fulfilling changes in expected inflation (sunspot shocks) affecting nominal wage bargaining. Since the estimated parameters fall near the locus of Hopf bifurcations, country-specific expected inflation shocks can...