We construct a model integrating the efficiency wage model of Shapiro-Stiglitz (1984) with the matching-bargaining models of Diamond, Mortensen and Pissarides (DMP). Firms and workers form pairwise matches, workers may shirk on the job, and the wage is set in an asymmetric Nash bargain over the...

This paper explores water pricing policy in Tegucigalpa, the capital of Honduras, in a political economy perspective. I argue that current water prices are too low and significantly below long-run marginal cost, and demonstrate that water prices must be raised significantly over the next ten...

We study a two-period model of efficient labor contracts between a firm and its workers, where firings and voluntary quits but no new hirings occur in period 2. We demonstrate that an increase in the firm's firing cost always raises average employment over the two periods when this cost is...