We consider an economy in which firms need to invest in capital before they can advertise a job, while applicants may …-invest in capital due to a hold-up problem. In contrast, if workers can direct their search to firms with different capital …

market competition will reduce equilibrium unemployment, whereas the effect of increased capital intensity is more complex …. Higher capital intensity will decrease the equilibrium unemployment when the elasticity of substitution between capital and … price setting mark-ups, affect the optimal capital stock. Our findings raise important questions for future empirical …

workers in employment. In my model, knowledge (in a broad sense) is an input into the production function of human capital … production of human capital. An improvement in IT is modelled as an increase in the number of people who can buy knowledge from … the preceding ladder. The return to human capital increases as one moves up the knowledge ladder. The economic mechanism …