One objective of government investment is to develop public infrastructure which may reduce private sector costs. In a developing economy, the scope for payoffs to investments of this sort may be particularly large. A major concern related to the recent fiscal adjustment in Mexico is that it has...

One objective of government investment is to develop public infrastructure which may reduce private sector costs. In a developing economy, the scope for payoffs to investments of this sort may be particularly large. A major concern related to the recent fiscal adjustment in Mexico is that it has...

We consider the effect of labor market rigidities on human capital accumulation and economic growth when some human capital is difficult to observe prior to employment. We distinguish between two types of human capital, those that formal schooling and test scores can measure (``knowledge") and...