We examine wage bargaining when employers and labor unions do not always take all general equilibrium effects into account but learn a steady state. If agents do hardly consider general equilibrium effects, low real wages and low unemployment results. With an intermediate view, when partial...

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...

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...

We examine wage-bargaining in a two-sector economy when employers and labor unions in each sector are not always aware of all general equilibrium feedback effects. We show analytically that if agents only consider labor demand effects, low real wages and low unemployment result. With an...

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,...