Wage inequality, segregation by skill and the price of capital in an assignment model

Some pieces of empirical evidence suggest that in the U.S., over the last few decades, (i) wage inequality between-plants has risen much more than wage inequality within-plants and (ii) there has been an increase in the segregation of workers by skill into separate plants. This paper presents a frictionless assignment model in which these two features can be explained simultaneously as the result of the decline in the relative price of capital. Additional implications of the model regarding the skill premium and the dispersion in labor productivity across plants are also consistent with the empirical evidence. [resumen de autor

Building the Family Nest: Premarital Investments, Marriage Markets, and Spousal Allocations

We develop a transferable utility model of the household in which the marriage market is characterized by (negative or positive) assortative matching, and spousal allocations are determined by premarital investments. We demonstrate that all sharing rules along the assortative order support efficient outcomes both in terms of premarital investments and intra-household allocations. The efficiency of premarital choices and household allocations then enables us to show that, for each couple, the marriage market generates a unique and maritally sustainable sharing rule that is a function of the distribution of premarital endowments and the sex ratios in the market. According to our results, transfers among spouses occur on two margins: premarital investments and intra-marital spousal allocations. Asymmetries in the sex ratios in the marriage markets produce gender differences in premarital investments and consumption that are larger for individuals with small premarital endowments than those with larger endowments. A corollary of these findings is that, when men are in short supply in the marriage markets, women can invest more than men even when the returns to investment are lower or the costs are higher for women. Copyright 2007 The Review of Economic Studies Limited.

Assignment Models For Constrained Marginals And Restricted Markets

Duality theorems for assignment models are usually derived assuming countable additivity of the population measures. In this paper, we use finitely additive measures to model assignments of buyers and sellers. This relaxation results in more complete duality theorems and gives greater flexibility concerning the existence of solutions, assumptions on the spaces of agents and on profit functions. We treat two modifications of the nonatomic assignment model. In the first model, upper and lower bounds are imposed on the marginal measures representing the activities of the buyers and sellers where the lower bounds reflect a certain minimum required level of activity on the agents. In the second model, the interaction of the agents is further restricted to a certain specified subset of all matchings of buyers and sellers