The authors consider an economy where contracts are necessary to encourage investments. Contract enforcement requires that a fraction of the agents work in the public sector and do not accept bribes. The authors find that (1) it may be optimal to allow some corruption and not enforce property...

Using U.K. data, the rational expectations permanent income hypothesis is rejected due to the predictive content of consumer confidence and not labor income or any other macroeconomic variable. The authors provide evidence suggesting that this cannot be explained by liquidity constraints and...

I review the two most popular explanations for the differential trends in wage inequality in US/UK and Europe: that relative supply of skills increased faster in Europe, and that European labour market institutions prevented inequality from increasing. Although these explanations go some way...

This paper examines the connection between the business cycle, nonlinearities, and asymmetries in the U.K. labor market. The economy is shown to display cyclical asymmetries; stochastic properties of variables such as employment, unemployment, real wages, and the unemployment-vacancy ratio...

In this paper, the authors survey noncompetitive theories of training. With competitive labor markets, firms never pay for investments in general training, whereas when labor markets are imperfect, firm-sponsored training arises as an equilibrium phenomenon. The authors discuss a variety of...