In analyses of labour market returns to education three competing theoretical approaches dominate the empirical research literature: education as productive skills, education as positional good, and social closure. We argue that, while these approaches might be suitable to explain the mechanisms...

This paper analyzes the allocation of workers to jobs and the wage distribution in Germany. Our main contribution is to reconcile prominent empirical models of wage dispersion (Abowd et al., 1999; Card et al., 2013) with theoretical sorting models (Shimer and Smith, 2000; Eeckhout and Kircher, 2011;...

This paper explores whether investments in information and communication technologies (ICT) and firm-sponsored training programmes are complementary. Three approaches are applied to panel data from German service companies for the time period 1994-98. Results for a system of interrelated factor...

The earnings of workers are reduced for many years after being displaced from their jobs, and those workers and their families face increased risk of other problems as well. The ills suffered by displaced workers motivated several recent expansions of government programs, including the...

We decompose permanent earnings risk into contributions from hours and wage shocks. To distinguish between hours shocks, modeled as innovations to the marginal disutility of work, and labor supply reactions to wage shocks we formulate a life-cycle model of consumption and labor supply. Both...

We decompose permanent earnings risk into contributions from hours and wage shocks. To distinguish between hours shocks, modeled as innovations to the marginal disutility of work, and labor supply reactions to wage shocks we formulate a life-cycle model of consumption and labor supply. Both...

The paper explores the concept of earning capacity, with a special emphasis on how earning capacity may be distinguished from expected earnings. Earning capacity is the expected earnings of a worker who chooses to maximize the expectation of actual earnings. Earning capacity differs from...

We explore the various arguments for and against the recommendation that younger households should invest a larger share of their pension wealth in risky assets. The ability of young agents to compensate their financial losses by saving more during their career provides the strongest argument in...