In this note, we analyze a stylized creative region that is populated by members of the creative class. The representative individual in this region possesses a constant relative risk aversion (CRRA) utility function. The existing creative capital is used to produce a final consumption good and...

We analyze the impact of preference matching and income on the distribution of the population in an aggregate economy consisting of an urban and an adjacent rural region. It costs more (less) to live in the urban (rural) region. Individuals choose freely to live either in the urban or in the...

We analyze the impact of preference matching and income on the distribution of the population in an aggregate economy of an urban and an adjacent rural region. It costs more (less) to live in the urban (rural) region. Individuals choose to live either in the urban or in the rural region. They...

We introduce international labor mobility in a three-sector general equilibrium model with rural-urban migration. We demonstrate that under some reasonable conditions an inflow of foreign skilled labor (capital) can reduce skilled-unskilled wage inequality

Using a dual structure depicting a developing economy, this paper shows that an increase in asset inequality can lead to wage inequality between skilled and unskilled labor. In addition, increasing asset inequality raises the luxury goods price and hence the unemployment ratio. These effects...

We analyze a market for microfinance in a region of a developing nation in which all projects are either of high or low quality. There is adverse selection because only borrowers know whether their project is of high or low quality but the microfinance institutions (MFIs) do not. The MFIs are...

Queuing mechanisms are commonly used in developing countries and in transition economies to allocate goods characterized by excess demand to citizens. Bribery and favoritism frequently accompany the use of such queuing mechanisms. Therefore, we first analyze a queuing model of resource...

We analyze a market for microfinance in a region of a developing nation in which all projects are either of high or low quality. There is adverse selection because only borrowers know whether their project is of high or low quality but the microfinance institutions (MFIs) do not. The MFIs are...

We first construct a theoretical model of tax evasion in a stylized developing country in which all taxpayers have either high or low income. The key problem is that the high income taxpayers may underreport their income. An individual income tax return can only be verified with an audit that...