This paper develops a simple model of economic and political institutions that lead to poor aggregate economic performance. In the model economy, groups with political power, "the elite", choose policies to increase their income and to directly or indirectly transfer resources from the rest of...

Inefficiencies in the bureaucratic organization of the state are often viewed as important factors in retarding economic development. Why certain societies choose or end up with such inefficient organizations has received very little attention, however. In this paper, we present a simple theory...

This paper presents three sets of results about equilibrium bias of technology. First, I show that when the menu of technological possibilities only allows for factor-augmenting technologies, the increase in the supply of a factor induces technological change relatively biased toward that...

This paper examines the connection between the business cycle, nonlinearities, and asymmetries in the U.K. labor market. The economy is shown to display cyclical asymmetries; stochastic properties of variables such as employment, unemployment, real wages, and the unemployment-vacancy ratio...

This paper presents a model in which firms and workers must engage in costly search to find a production partner. In this setting the skill, job and wage distributions and their evolutions are endogenized. The presence of search frictions implies that there are two redistributive forces in the...

Many technologies used by the LDCs are developed in the OECD economies and are designed to make optimal use of the skills of these richer countries' workforces. Differences in the supply of skills create a mismatch between the requirements of these technologies and the skills of LDC workers, and...

We construct a model of simultaneous change and persistence in institutions. The model consists of landowning elites and workers, and the key economic decision concerns the form of economic institutions regulating the transaction of labour (e.g., competitive markets versus labour repression)....

Becker’s theory of human capital predicts that minimum wages should reduce training investments for affected workers because they prevent these workers from taking wage cuts necessary to finance training. In contrast, in noncompetitive labor markets, minimum wages tend to increase training of...

In this paper, the authors survey noncompetitive theories of training. With competitive labor markets, firms never pay for investments in general training, whereas when labor markets are imperfect, firm-sponsored training arises as an equilibrium phenomenon. The authors discuss a variety of...