This paper introduces time-varying grouped patterns of heterogeneity in linear panel data models. A distinctive feature of our approach is that group membership is left unspecified. We estimate the model’s parameters using a “grouped fixed-effects” estimator that minimizes a least-squares...

Proving the folk theorem in a game with three or more players usually requires imposing restrictions on the dimensionality of the stage-game payoffs. Fudenberg and Maskin (1986) assume full dimensionality of payoffs, while Abreu et al. (1994) assume the weaker NEU condition ("nonequivalent...

Sorting, Employment and Wages in multi-worker firms

This paper examines how employer and worker specific productivity shocks transmit to wage and employment in an economy with search frictions and firm commitment. I develop an equilibrium search model with worker and firm shocks and characterize the optimal contract offered by competing firms to...

We write and estimate a dynamic model of wages, amenities and labor mobility.Workers trade off wage and amenity offers when deciding whether to change jobs,while facing heterogenous mobility costs. We show that these frictions can turn strongindividual preferences for non wage characteristics...

We study linear factor models under the assumptions that factors are mutually independent and independent of errors, and errors can be correlated to some extent. Under factor non-Gaussianity, second to fourth-order moments are shown to yield full identification of the matrix of factor loadings....

As economic inequality in Europe has continued to rise, it has become the subject of increasing academic attention. What are the drivers of inequality? How does it affect intergenerational economic and social mobility? At what point does inequality become a drag on economic growth or a threat to...

We use detailed information on labor earnings and employment from Social Security records to document earnings inequality in Spain from 1988 to 2010. Male earnings inequality was strongly countercyclical: it increased around the 1993 recession, showed a substantial decrease during the 1997-2007...

We use tax files from 2004 to 2010 to document the recent evolution of earnings inequality in Spain. We find that inequality went in parallel with the evolution of the unemployment rate during the period. This evolution is consistent with the evidence from Social Security records recently...

Abstract Job characteristics can affect worker turnover through their effect on utility and through their effect on outside job opportunities. We separately identify and estimate the roles of these two channels. Our method exploits information on job changes and relies on an augmented sample...