The purpose of the paper is to study the effects of labor market policies on the equilibrium rate of growth in the Grossman-Helpman model. For that purpose, the version of the their model developed by Klette and Kortum to explain the distribution of firm size is extended to allow for both...

We construct a bilateral search model of the housing market in which agents differ in their flow rewards while searching. Buyers and sellers enter the market with high flow rewards, but move at a Poisson rate to a state with low flow rewards if they do not transact in the meantime. We...

I analyze the implications of moral hazard in dynamic economy with production. In particular, I add agency frictions to a benchmark stochastic growth model, by assuming that firms observe output but hours worked and productivity are unobservable. I cast the problem as a continuous time principal...

Through marriage, individuals can share some risks that would otherwise be uninsurable. In this paper, we ask how much idiosyncratic income risk can be diversified away through marriage contracts alone versus how much risk there remains for public unemployment insurance programs to alleviate. We...

We study a multiperiod principal-agent problem with moral hazard in which the agent is required to exert effort only in the initial period of the contract. The effort choice of the agent in this first period determines the conditional distribution of output in the following periods. The paper...

This paper explores wage-setting in the presence of asymmetric information. Firms know their own productivity, while workers only know the distribution of productivity in the economy. Although there is unemployment in equilibrium, the labor market is competitive in the sense of Moen (1997):...

This paper investigates the welfare and output effects of inflation in a monetary economy with search frictions and sticky prices. Agents trade in both a centralized Walrasian market and a decentralized search market. Trade has two dimensions: the frequency of trades (how often agents trade) and...

In this paper we use search theory to model the decision making process of boundedly rational agents. In the canonical (sequential) search approach, each decision maker is deemed to acquire new information, at random intervals of time, regarding the external environment. In the simplest of such...

Models where money arises due to a transactions motive imply that an increase in aggregate activity will raise the demand for money. Models where money arises due to money being the most preferred form of precautionary savings imply that a decrease in individual uncertainty will lower the demand...

Every month thousands of people become employed or unemployed. In the same month thousands of people decide to enter or exit the labor force. Although most of the literature focuses primarily on job flows, several recent empirical and theoretical studies suggest that, in order to completely...