By simulating social planner's optimal redistributive policy, this paper analyzes government's high education policy in a dual economy composed by skilled workers that invest in education and unskilled workers that do not. In a developed economy, characterized by an equilibrium with low...

Inflation can "grease" the wheels of the labor market by relaxing downward wage rigidity but it can also increase uncertainty and have a negative "sand" effect. This paper studies the grease effect of inflation by looking at whether the interaction between inflation and labor market regulations...