Earnings within a firm usually increase with job rank. Earnings across firms usually increase with firm size. An assignment model addresses these facts. People are assigned to firms and to jobs within these firms by their managerial talent. In equilibrium, higher quality managers are assigned...

We develop a simple general equilibrium model of production where, despite the existence of involuntary unemployment, non-equalized job rents are the only distortion. Hence, a standard GDP function exists. Unemployment results from either efficiency wage setting or wage bargaining

A model is developed to analyse the relation between wages and technological complexity, as characterised by the "O-ring" theory of production. In equilibrium, the adoption of a relatively complex technology induces the employer to pay higher wages. We argue that the model can explain increased...