In labor markets with worker and firm heterogeneity, the matching between firms and workersmay be assortative, meaning that the most productive workers and firms team up. Weinvestigate this with longitudinal population-wide matched employer-employee data fromPortugal...

Implementing performance pay requires that workers' output be measured. Whenmeasurement costs differ among firms, those with a measurement cost advantage choose toimplement performance pay. They attract the best workers, and both the level and variabilityof compensation are higher at these firms...

Extreme adverse selection arises when private information has unboundedsupport, and market breakdown occurs when no trade is the only equilibriumoutcome. We study extreme adverse selection via the limit behavior of afinancial market as the support of private information converges to an...

This paper addresses the personal linkages between the public service and the legislaturethat emerge because public servants pursue a political mandate. There are concerns thatthe strong representation of public servants in many Western parliaments compromises theconstitutionally proposed...

This paper explores the disjuncture in the New Labour Governmentbetween the largest reform in fifty years of the nation’s Legal Aid systemand the concurrent pursuit of progressive anti-poverty, social inclusion,community regeneration, and human rights social policies. The failure ofthe newly...

We show that the joint liability lending contracts derived in Ghatak (2000) violate an ex post incentive-compatibility constraint which says the amount of joint liability cannot exceed the amount of individual liability. We derive and characterize optimal separating joint liability contracts...

The Peter Principle states that, after a promotion, the observed output of promotedemployees tends to fall. Lazear (2004) models this principle as resulting from a regression tothe mean of the transitory component of ability...

We provide evidence on the extent of ethnic segregation experienced bychildren across secondary schools and neighbourhoods (wards). Using 2001Schools Census and Population Census data we employ the indices ofdissimilarity and isolation and compare patterns of segregation across nineethnic...