In this paper we study the functioning of representative democracy when politicians are better informed than the electorate about conditions relevant for policy choice. We consider a model with two states of the world. The distribution of voters' preferred policies shifts with the state. The two...

Despite seven years of economic growth a large gap exists in the wages earned by workers at the top of the earnings scale and those at the bottom. The leading explanation for this growth in wage inequality continues to be the skills-mismatch theory. This theory in part posits that gains in...

We study immigration policy in a small receiving economy under self-selection of migrants. We show that a non-discriminatory immigration policy choice affects and is affected by the migratory decisions of skilled and unskilled foreign workers. From this interaction multiple equilibria may arise,...

Human capital investment is formed through households' endogenous decision, and competes with physical capital investment. Idiosyncratic shock shifts the skilled labor share and changes tightness in both skilled and unskilled markets. Given inelastic labor participation, the model can generate...

It has become common within the literature of skill-biased technological change to look at technologies, as well as their impact on the demand for labor as homogeneous across industries. This paper challenges this view. Using a linked employer-employee panel of Germany differentiated by...

Entrepreneurs are found to have balanced skill sets and most have worked in small firms before starting their own business. In light of this, we compare the skill sets of employees working in businesses of different size to the skill sets of entrepreneurs using a rich data set on the applied...

Human capital is transferable across occupations, but only to a limited extent because of differences in occupational skill-profiles. Higher skill overlap between occupations renders less of individuals' human capital useless in occupational switches. Current occupational distance measures...

While earlier literature proposed a monotonic relationship between the skill level (as measured by educational attainment) and employment prospects, recent literature suggests that this relationship has changed and that it is now necessary to distinguish between different kinds of skills and...

Empirical investigations with enterprise level data from official statistics often use the average wage as a proxy variable for the qualification of the workforce, mostly due to the lack of detailed information on the qualification of the employees. This paper uses unique newly available data...