This paper examines how the first-best models of compensation based on the agents' talents and responsabilities analyzed in some recent contributions can be extended to a second-best context. A few social criteria are proposed and compared to alternative approaches by Roemer and Van de gaer.

This paper studies the impact of employment subsidies in a simple macroeconomic model with imperfect competition and unemployment due to wage rigidity. COmputed with a simple formula that is robust to the specification of imperfect competition and wage rigidity, subsidies can make an economy...