We study a model in which management and a union bargain sequentially, first choosing a rule that will later determine the level of employment, and then choosing a wage. The government then chooses an output or an employment subsidy. An exogenous natural turnover rate in the unionized sector...

We analyze a model in which a government uses a second best policy to affect the reallocation of labor, following a change in relative prices. We consider two extreme cases, in which the government has either unlimited or negligible ability to commit to future actions. We explain why the ability...

We model adjustment costs in a general equilibrium setting using a “transport sectorâ€. This sector provides services needed to re-allocate a factor of production across wo other sectors. A market imperfection in the transport sector causes adjustment to occur too slowly in the absence...