This paper studies the impact of an European-like labor market regulation on the return to schooling, equilibrium unemployment and welfare. We show that firing costs and temporary employment have opposite effects on educational choices. We furthermore demonstrate that a laissez faire economy...

Labor market studies on the effects of minimum wages are typically confined to the sector or worker group directly affected. We present a two-sector search model in which one sector is more productive than the other one and thus, pays higher wages. In such a framework, setting a minimum wage in...

We consider a dual labor market with a frictional formal sector and a competitive informal sector. We show that the size of the informal sector is generally too large compared to the optimal allocation of the workers. It follows that our results give a rationale to informality-reducing policies.

We develop a theory and an empirical strategy to estimate the welfare gains from trade in economies with frictional local labor markets. We obtain a welfare formula that nests previous results and features an additional adjustment margin, via the employment rate. To obtain causal estimates of...

Does over-education assist or hinder occupational advancement? Career mobility theory hypothesizes that over-education leads to a higher level of occupational advancement and wage growth over time, with mixed international empirical evidence. This paper re-tests career mobility theory directly...

The rate at which unemployed workers find jobs exhibits a strong negative relationship with the level of unemployment, a strong positive relationship with the level of job vacancies, and little variation at low frequencies. These stylized facts imply a positive correlation between unemployment...