This article analyzes the choice between internal promotion and external recruitment within the framework of an economic contest. Opening up the competition for a position to external candidates reduces the chance of promotion for existing workers and therefore their incentive to work. Increasing the prize for winning can maintain incentives but is limited by moral hazard and potentially disruptive office politics. Alternatively, a competitive handicap can be awarded to existing workers to boost their chances. This strategy is consistent with the general observation that an external candidate is recruited only if she is significantly superior to the internal contestants.

This article presents a model of labor market adjustments as a sequential process of reallocation among various market and nonmarket sectors. Training costs introduce friction into the process, while fixed costs of working limit work sharing, resulting in unemployment. Adjustments in sectoral labor market variables to demand shocks can follow very different patterns, depending on relative demands and the expected duration of the shocks. In particular, a permanent boom in a sector may result in an initial increase in unemployment and reduction in working hours even as employment increases, reflecting contemporaneous substitution between the margins and intertemporal substitution in recruitment.

Becker attributes the existence of marital transfers to inflexibility in the division of joint product within the marriage. If that were the only reason, we would not have observed the coexistence of dowries and bride‐prices. This paper offers an alternative analysis. While Becker's interpretation is retained for bride‐prices, a dowry is now represented as a premortem bequest by altruistic parents for a daughter. It not only increases the wealth of the new conjugal household but also enhances the bargaining power of the bride in the allocation of the output within the household, thereby safeguarding here welfare. Using micro data from Taiwan, we found that a dowry improves the bride's welfare whereas a bride‐price has no effect. These empirical results support the theoretical predictions of the model.