Some have observed that individuals perform worse after being promoted. The Peter principle, which states that people are promoted to their level of incompetence, suggests that something is fundamentally misaligned in the promotion process. This view is unnecessary and inconsistent with the...

The theory of human capital is agnostic on what constitutes firm-specific skills. The theory specifies that specific skills contribute to productivity only at the current firm. A broader approach lets all skills be general, but firms use them with different weights attached. For example,...

Recessions appear to be times when the marginal rate of substitution between goods and workers' time falls below the marginal product of labor. If so, the allocation of workers' time is inefficient. I develop a model of households and production that reconciles cyclical movements in the marginal...