In the past 30 years, wage inequality has increased steeply while real minimum wages have fallen. This paper demonstrates that a general equilibrium model with endogenous skill choice is required to correctly evaluate the implications of minimum wage changes. The minimum wage not only truncates the wage distribution but also affects skill prices and therefore changes the incentives that people face when making educational decisions. The calibrated model suggests—in line with recent empirical literature—that even though minimum wages affect the bottom end of the wage distribution more, their impact on the top end is significant as well.

The government has attempted to ameliorate gaps in college access and success by providing need-based grants, but little evidence exists on the long-term impacts of such aid. We examine the effects of the Florida Student Access Grant (FSAG) using a regression-discontinuity strategy and exploiting the cut-off used to determine eligibility. We find that grant eligibility had a positive effect on attendance, particularly at public 4-year institutions. Moreover, FSAG increased the rate of credit accumulation and bachelor’s degree completion within 6 years, with a 22% increase for students near the eligibility cut-off. The effects are robust to sensitivity analysis.

There are two obvious possibilities that can account for the rise in productivity during recent recessions. The first is that the decline in the workforce was not random, and that the average worker was of higher quality during the recession than in the preceding period. The second is that each worker produced more while holding worker quality constant. We call the second effect, "making do with less," that is, getting more effort from fewer workers. Using data spanning June 2006 to May 2010 on individual worker productivity from a large firm, it is possible to measure the increase in productivity due to effort and sorting. For this firm, the second effect-that workers' effort increases-dominates the first effect-that the composition of the workforce differs over the business cycle.

There are persistent differences in self-reported subjective well-being across US metropolitan areas, and residents of declining cities appear less happy than others. Yet some people continue to move to these areas, and newer residents appear to be as unhappy as longer-term residents. While historical data on happiness are limited, the available facts suggest that cities that are now declining were also unhappy in their more prosperous past. These facts support the view that individuals do not maximize happiness alone but include it in the utility function along with other arguments. People may trade off happiness against other competing objectives.

Using 1979–2012 CPS data for the United States and 1975–2012 NES data for Great Britain, we study wage behavior in both countries, with particular attention to the Great Recession. Real wages are procyclical in both countries, but the procyclicality of real wages varies across recessions, and does so differently between the two countries, in ways that defy simple explanations. We devote particular attention to the hypothesis that downward nominal wage rigidity plays an important role in cyclical employment and unemployment fluctuations. We conclude that downward wage rigidity may be less binding and have lesser allocative consequences than is often supposed.

We consider the link between parents’ influence over the preferences of children, parental investments in children’s human capital, and children’s support of elderly parents. It may pay for parents to spend resources to “manipulate” children’s preferences in order to induce them to support their parents in old age. Since parents invest more in children when they expect greater support, manipulation of child preferences may end up helping children and parents. A new result, which we call the “Rotten Parent Theorem,” demonstrates that if children are altruistic, then even selfish parents will make the optimal investment in their children’s human capital.