Causal effects of a policy change on the hazard rates of a duration outcome variable are not identified from a comparison of spells before and after the policy change when there is unobserved heterogeneity in the effects and no model structure is imposed. We develop a discontinuity approach that...

Do households value access to free health insurance when making labor supply decisions? We answer this question using the introduction of universal health insurance in Mexico, the Seguro Popular (SP), in 2002. The SP targeted individuals not covered by Social Security and broke the link between...

It is often argued that informal labor markets in developing countries promote growth by reducing the impact of regulation. On the other hand informality may reduce the amount of social protection offered to workers. We extend the wage-posting framework of Burdett and Mortensen (1998) to allow...

A comparison of hazard rates of duration outcomes before and after policy changes is hampered by non-identification if there is unobserved heteogeneity in the effects and no model structure is imposed. We develop a discontinuity approach that overcomes this by exploiting variation in the moment...

We develop an equilibrium model of on-the-job search with ex-ante heterogeneous workers and firms, aggregate uncertainty and vacancy creation. The model produces rich dynamics in which the distributions of unemployed workers, vacancies and worker-firm matches evolve stochastically over time. We...

I develop and estimate a model of the labor market in which precautionary savings interacts with labour market frictions to produce substantial inequality in wealth among ex ante identical workers. I show that a model of on-the-job search,in which workers are risk averse and markets are...

The labor market by itself can create cyclical outcomes, even in the absence of exogenous shocks. We propose a theory that shows that the search behavior of the employed has profound aggregate implications for the unemployed. There is a strategic complementarity between active on-the-job search...