This article analyzes an experimental program that offered payments to unemployment insurance (UI) recipients who found a job quickly. The experiment provided exogenous differences in individual incentives which I use to test labor supply and search theories of unemployment. I examine predictions about the timing of exits from unemployment and the effect of the fixed-amount bonus on different wage level groups. I also argue that the experimental evidence does not show the desirability of a permanent program. A permanent program would sharply increase the compensation for short UI spells, likely increasing the claims rate and possibly increasing unemployment.

Palestinian residents of the West Bank and Gaza Strip who work in Israel generally earn more than Palestinians employed locally, but this wage premium is highly volatile. Beginning with the 1987 Palestinian uprising, changes in wage differentials by work location parallel Palestinian absences from work in Israel. This article interprets changing location differentials in response to exogenous shocks as movements along an Israeli demand curve for migrant workers. Estimates of a model of the West Bank and Gaza Strip labor market are used to evaluate the effect of policies governing Palestinian access to the Israeli labor market.

We develop an empirical model of adolescent premarital childbearing in which a woman's decisions affect a sequence of outcomes: premarital pregnancy, pregnancy resolution, and the occurrence of marriage before the birth. State welfare, abortion, and family planning policies alter the costs and benefits of these outcomes. For white adolescents welfare, abortion, and family planning policy variables have significant effects on these outcomes consistent with theoretical expectations. Black adolescents' behavior shows no association with the policy variables. The different racial results may reflect differences in sample size or important unmeasured racial differences in factors that influence fertility and marital behavior.

I combine a regression discontinuity design with rich data on academic and labor market outcomes for a large sample of Florida students to estimate the returns to college admission for academically marginal students. Students with grades just above a threshold for admissions eligibility at a large public university in Florida are much more likely to attend any university than below-threshold students. The marginal admission yields earnings gains of 22% between 8 and 14 years after high school completion. These gains outstrip the costs of college attendance, and they are largest for male students and free-lunch recipients.

This study uses a model of comparative advantage to model the choice of workers into three broad occupations. The pursuit of comparative advantage is shown to reduce the level of inequality from what would occur in a random assignment of workers into occupations. However, after pricing the skills of workers separately within occupations, the results indicate that the sectors are becoming more similar in the way that they value workers' skills, thus reducing the importance of comparative advantage over time. Inequality is rising as the economy is increasingly characterized by the pursuit of absolute advantage rather than comparative advantage.

This article examines a dynamic adverse‐selection model that generates equilibrium employment cycles. In the model, firms hire workers from unemployment, observe workers' productivity through time, and (following the profit‐maximizing rule) eventually fire unproductive workers. If hiring costs are low, the dynamical system converges to a steady state in which the unemployment pool contains mostly low‐ability workers. However, if hiring costs are sufficiently large, this “lemons effect” would make firms unwilling to hire workers. In this case, the system converges to a cyclical equilibrium in which firms alternate between hiring and not hiring.

A model is produced in which labor contracts that prespecify (unindexed) nominal wage payments arise endogenously. These contracts function as a self-selection mechanism. Under appropriately different attitudes toward price-level risk (which can either arise directly from preferences or be induced by different patterns of asset holdings), nominal contracts allow high-productivity workers to signal their type by their willingness to accept unindexed contracts. This explanation of nominal contracts does not require that money be used in any particular set of transactions, and nominal contracts enhance the risk faced by all parties accepting them.

A real business cycle model is constructed in which workers are heterogeneous and privately informed about their own productive abilities. The model is structured so that interesting cycles cannot arise in the absence of the informational asymmetry. In the presence of this asymmetry, the model produces cyclical fluctuations that are consistent with features of observed business cycles. Hours behavior of individuals is also consistent with micro evidence. In addition, the model gives rise to equilibrium unemployment of labor. The determination of equilibrium unemployment rates, hours levels, and output are integrally related in the analysis.