This paper analyses the interaction between internal agency problems within firms and external search frictions when workers have private information. We show that the allocation of resources is determined by a modified Hosios Rule. We then analyze the effect of changes in the macro economic variables on the wage contract and the unemployment rate. We find that private information may increase the responsiveness of the unemployment rate to changes in productivity. The incentive power of the wage contracts is positively related to high productivity, low unemployment benefits and high search frictions.

We evaluate the effects of a fundamental lever of constitutional design: the duration of public office terms. We present a simple model grounded in interviews with legislators and highlight three forces shaping incentives to exert legislative effort. We exploit two natural experiments in the Argentine Congress (where term lengths were assigned randomly) to ascertain which forces are empirically dominant. Results for separate measures as well as an aggregate index of legislative effort show that longer terms increase effort. Shorter terms appear to discourage effort not due to campaign distractions but due to an investment payback logic: when effort yields returns over multiple periods, longer terms yield a higher chance of capturing those returns. A broader implication is that job stability may promote effort despite making individuals less accountable.

In view of the non-identification of the first-price auction model with risk-averse bidders, this paper proposes some parametric identifying restrictions and a semiparametric estimator for the risk aversion parameter(s) and the latent distribution of private values. Specifically, we exploit heterogeneity across auctioned objects to establish semiparametric identification under a conditional quantile restriction of the bidders' private value distribution and a parameterization of the bidders' utility function. We develop a multistep semiparametric method and we show that our semiparametric estimator of the utility function parameter(s) converges at the optimal rate, which is slower than the parametric one but independent of the dimension of the exogenous variables thereby avoiding the curse of dimensionality. We then consider various extensions including a binding reserve price, affiliation among private values, and asymmetric bidders. The method is illustrated on U.S. Forest Service timber sales, and bidders' risk neutrality is rejected.

We study a model where the aggregate trading of currency speculators reveals new information to the central bank and affects its policy decision. We show that the learning process gives rise to coordination motives among speculators leading to large currency attacks and introducing non-fundamental volatility into exchange rates and policy decisions. We show that the central bank can improve the ex ante effectiveness of its policy by committing to put a lower weight ex post on the information from the market, and that transparency may either increase or decrease the effectiveness of learning from the market, depending on how it is implemented.

This paper estimates the effect of the early childhood environment on a large array of social and economic outcomes lasting almost 60 years. To do this, we exploit variation in the living conditions experienced by Yemenite children after being airlifted to Israel in 1949. We find that children who were placed in a more modern environment ( i.e. with better sanitary and infrastructure conditions) were more likely to obtain higher education, marry at an older age, have fewer children, and work at age 55. They were also more likely to be assimilated into Israeli society, to be less religious, and have more worldly tastes in music and food. However, these effects are found mainly for women and not for men. We also find an effect on the next generation—children who lived in a better environment grew up to have children with more education.