Short-term contracts and exogenous productivity growth are introduced in a simple wage bargaining model. The equilibrium utilities corresponding to militant union behaviour are independent of the contract length. Necessary and sufficient conditions for monotonic convergence to a unique steady...

We study a simple infinite horizon model with indivisible labor. We characterize the optimal plans under the assumptions that $\beta R = 1$ and that $1/2 \leq \beta 1$, where R is the gross interest rate and $\beta$ is the discount factor. We show that under those assumptions, optimal plans are...

This paper develops a model in which two information frictions are embedded into an otherwise conventional neoclassical growth model; an adverse selection problem in the labor market and a costly state verification problem in the credit market. The former allows equilibrium unemployment to arise...