The paper suggests a new test for rent-sharing in the U.S. labor market. Using an unbalanced panel from the manufacturing sector, it shows that a rise in a sector's profitability leads after some years to an increase in the long-run level of wages in that sector. The paper controls for workers' characteristics, for industry fixed-effects, and for unionism.… (More)
This paper considers a general equilibrium model in which the distinction between uncertainty and risk is formalized by assuming agents have incomplete preferences over state-contingent consumption bundles, as in Bewley (1986). Without completeness, individual decision making depends on a set of probability distributions over the state space. A bundle is… (More)
A turnpike theorem is proved for a general equilibrium model with finitely many immortal consumers.
Any opinions expressed here are those of the author(s) and not those of the institute. Research disseminated by IZA may include views on policy, but the institute itself takes no institutional policy positions. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between… (More)
Anecdotal evidence suggests that uncontrolled managers let wages rise above competitive levels. Testing this belief, however, has proven diicult because independent variation in the extent of managerial discretion is needed. In this paper, we use states' passage of anti-takeover legislation as a source of such independent variation. Passed in the 1980s,… (More)
In 2010 all ECB publications feature a motif taken from the €500 banknote. and participants at the June 2008 WDN Conference, at a seminar at the Athens University of Economics and Business, and at the University of Zürich for their comments on an earlier version of this paper. Views expressed in this paper are those of the authors and do not necessarily… (More)
Focusing on tax policy with incomplete asset markets, we create a framework for proving the existence of Pareto improving taxes, for computing them, and for bounding the improvement. The protagonist is the price adjustment following an intervention. If the price adjustment is sufficiently sensitive to risk aversions, then generically in economies equilibria… (More)