This article presents a model of labor market adjustments as a sequential process of reallocation among various market and nonmarket sectors. Training costs introduce friction into the process, while fixed costs of working limit work sharing, resulting in unemployment. Adjustments in sectoral...

This article analyzes the choice between internal promotion and external recruitment within the framework of an economic contest. Opening up the competition for a position to external candidates reduces the chance of promotion for existing workers and, therefore, their incentive to work....

The decomposition of wage residuals into standard deviation and percentile ranks can be misleading because the two measures are not necessarily independent. With rising wage inequality, the mean percentile rank of low-wage groups will rise simply because more dispersed distributions have thicker...