A quantitative model of two-sided search with ex-ante heterogeneity in both worker and entrepreneurial skills is proposed. It is possible to characterize both the competitive equilibrium and the optimal solution numerically. The competitive equilibrium is shown to be suboptimal. Less-skilled...

In their 1993 book, Richard Vedder and Lowell Gallaway contend that US unemployment during the twentieth century can be largely explained by movements in the "adjusted real wage rate", that is, the real hourly wage rate divided by labor productivity. In particular, the authors suggest that...