An explanation of involuntary unemployment and procyclical quits based on models of implicit contracts and on-the-job search.

An analysis of a one-period, two-sector model in which firms must pay a fixed cost of hiring. The authors show that this type of model results in more employment variability and less-procyclical wages than do models without fixed hiring costs.

A presentation of computational counterfactual experiments that examine the quantitative impact of marginal tax rates on the distribution of income.

In this paper we study the quantitative impact of marginal tax rates on the distribution of income. Our methodology builds on computable general-equilibrium framework. We find that distortions from marginal tax rate changes of the sort implied by the Tax Reform Act of 1986 have sizable effects...