The US labour market has experienced a remarkable polarization in the 1980s and 1990s. Moreover, recent empirical work has documented a sharp increase in the wealth to income ratio in that period. Contemporary to these inequality trends, the US faced a fast technological catch-up as European...

Strong hysteresis in the labour market (see Cross, 1995) requires workers to be heterogeneous in terms of the cost of hiring and firing. We show how such heterogeneity arises naturally in labour markets due to differences in workers’ age by showing that both the hiring and the firing...

This study investigates the effects of migration possibilities on the demand for education and human capital formation in the labour-sending country. The paper assumes that workers have to pay a pecuniary cost privately to receive education under budget constraints. It was found that higher...

We document a slowdown in low-skilled immigration that began around the onset of the Great Recession in 2007, which was associated with a subsequent rise in low-skilled wages, a decline in the skill premium, and labor shortages in service occupations. Falling returns to education also coincided...

We develop a model of monopsonistic wage competition with heterogenous worker ability and intra-firm production complementarities. We use this to illustrate the conditions under which: (i) the divergence between wages and productivity is an equilibrium phenomena; and (ii) this divergence is...

Using matched worker/plant level data for Norway, theories explaining the change in skill composition are assessed using direct evidence on the job creation and destruction for high, medium and low skilled workers. Skill based job creation is analysed in detail for plants in a high-skill service...