Does the market allocate the right workers to the right jobs? Since observable (to economists) variables account for only a small fraction of the wage variance in the data, to answer this question it is essential to study assortative matching between employers and employees based on their...

We exploit policy discontinuity at U.S. state borders to identify the effects of unemployment insurance policies on unemployment. We find large effects of unemployment benefit extensions on unemployment. In fact, the estimates imply that most of the persistent increase in unemployment during the...

since the expected wage is increasing in the expected number of offers received since the job started. The business-cycle volatility of wages is higher for new hires and for job-to-job switchers than for job stayers since workers can sample from a larger pool of job offers in a boom than in a...

The rapidly growing literature studying the returns to firm- and government-sponsored training has made a striking observation. Returns to firm-sponsored training are positive and large while returns to government-sponsored training are low or even negative, especially in the short run. This has...

The Dynamic Effects of Aggregate Demand and Supply Disturbances in Models with Heterogeneous Inputs

We document an almost perfect negative correlation between the returns to experience and the average experience per worker in the labor market. We provide a model that rationalizes this finding. We consider workers as providing two distinct productive services - physical effort, or ``labor,''...

This finding is important for several active lines of research in macro/labor. For example, in the literature on the quantitative analysis of labor search models, it is the behavior of wages that distinguishes different calibration strategies with radically different implications. Current...

We propose a way to measure the contribution of search frictions to the level of wage dispersion observed in the data. Using the data from the 1979 cohort of the National Longitudinal Survey of Youth we find that the variance of match qualities between workers and employers accounts for about 6%...

We show that the key identifying assumptions underlying the existing approaches to identifying technology shocks in the data are violated in models with heterogeneous capital and labor. We propose a new method to identifying technology shocks in the data in presence of factor heterogeneity and...

We show theoretically how to identify, using wage data alone, whether assortative matching between workers and firms is positive or negative. The results of a Monte Carlo study of calibrated models featuring positive and negative sorting illustrate that the method performs well given the...