We derive the optimal income tax schedule for a life cycle labor supply model in which productivity varies exogenously and deterministically. Individuals choose whether and how much to work at each date. The government must finance a given expenditure and does not have access to lump sum...

Online appendix for the Review of Economic Dynamics article

Measured total factor productivity often declines sharply during financial crises. In 1982, the Chilean manufacturing sector suffered a severe contraction in output, most of which can be accounted for a falling Solow residual. Using establishment data from the Chilean manufacturing census, I...

A stepping stone arises in risky environments with learning and transferrable human capital. An example is the role played by academic two-year colleges in postsecondary education: Students, as they learn about the uncertain educational outcomes, can drop out or transfer up to harder and more...

This paper presents a dynamic model of the decision to pursue a college education in which students face uncertainty about their future income stream after graduation due to unobserved heterogeneity in their innate scholastic ability. After students matriculate and start taking exams, they...