Empirical studies find that the age-variance profile of wages is U-shaped. The objective of this paper is to explore the driving forces of the U-shape in a model with search frictions. I introduce endogenous search effort and a fixed retirement age into Cahuc, Postel-Vinay, and Robin s (2006)...

We study an infinitely repeated principal-agent relationship with on-the-job search. On-the-job search is modeled as a dimension of the agent's effort vector that has no effect on output, but raises his future outside option. The agent's incentives to search are increasing in the degree to which...

This paper deals with fiscal policy over the business cycle when international financial markets are imperfect. I document evidence that government expenditure tends to be more procyclical the higher is the borrowing cost for a sovereign. Decomposing government expenditure components shows that...