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Author:Krusell, Per 

Working Paper
The political economy of labor subsidies

We explore a political economy model of labor subsidies, extending Meltzer and Richard's median voter model to a dynamic setting. We explore only one source of heterogeneity: initial wealth. As a consequence, given an operative wealth effect, poorer agents work harder, and if the agent with median wealth is poorer than average, a politico-economic equilibrium will feature a subsidy to labor. The dynamic model does not have capital, but it has perfect markets for borrowing and lending. Because tax rates influence interest rates, another channel for redistribution appears, since a decrease in ...
Working Paper , Paper 06-09

Discussion Paper
Macroeconomic implications of investment-specific technological change

A quantitative investigation of investment-specific technological change for the U.S. postwar period is undertaken, analyzing both long-term growth and business cycles within the same framework. The premise is that the introduction of new, more efficient capital goods is an important source of productivity change, and an attempt is made to disentangle its effects from the more traditional Hicks-neutral form of technological progress. The balanced growth path for the model is characterized and calibrated to U.S. National Income and Product Account data. The long- and short-run U.S. data are ...
Discussion Paper / Institute for Empirical Macroeconomics , Paper 76

Journal Article
Unemployment and vacancy fluctuations in the matching model: inspecting the mechanism

Economic Quarterly , Volume 91 , Issue Sum , Pages 19-50

Journal Article
Implications of the capital-embodiment revolution for directed R&D and wage inequality

Economic Quarterly , Volume 89 , Issue Fall , Pages 25-50

Working Paper
Technical appendix for \\"Frictional wage dispersion in search models: a quantitative assessment\\"

In this Technical Appendix to Hornstein, Krusell, and Violante (2006) (HKV, 2006, hereafter) we provide a detailed characterization of the search model with (1) wage shocks during employment and (2) on-the-job search outlined in Sections 6 and 7 of that paper, and we derive all of the results that are only stated in HKV (2006). In particular, we derive the expressions for our preferred measure of frictional wage inequality: the ratio of average wages to the reservation wage, or, the `mean-min' wage ratio.
Working Paper , Paper 06-08

Working Paper
The effects of technical change on labor market inequalities

In this chapter we inspect economic mechanisms through which technological progress shapes the degree of inequality among workers in the labor market. A key focus is on the rise of U.S. wage inequality over the past 30 years. However, we also pay attention to how Europe did not experience changes in wage inequality but instead saw a sharp increase in unemployment and an increased labor share of income, variables that remained stable in the U.S. We hypothesize that these changes in labor market inequalities can be accounted for by the wave of capital-embodied technological change, which we ...
Working Paper , Paper 04-08

Working Paper
Frictional wage dispersion in search models: a quantitative assessment

Standard search and matching models of equilibrium unemployment, once properly calibrated, can generate only a small amount of frictional wage dispersion, i.e., wage differentials among ex-ante similar workers induced purely by search frictions. We derive this result for a specific measure of wage dispersion|the ratio between the average wage and the lowest (reservation) wage paid. We show that in a large class of search and matching models this statistic (the mean-min ratio") can be obtained in closed form as a function of observable variables (i.e., interest rate, value of leisure, and ...
Working Paper , Paper 06-07

Journal Article
The IT revolution : is it evident in the productivity numbers?

Economic Quarterly , Issue Fall , Pages 49-78

Conference Paper
Vintage capital as an origin of inequalities

Does capital-embodied technological change play an important role in shaping labor market inequalities? This paper addresses the question in a model with vintage capital and search / matching frictions where costly capital investment leads to large heterogeneity in productivity among vacancies in equilibrium. The paper first demonstrates analytically how both technology growth and institutional variables affect equilibrium wage inequality, income shares and unemployment. Next, it applies the model to a quantitative evaluation of capital as an origin of wage inequality: at the current rate of ...
Proceedings , Issue Nov

Journal Article
Quality change in the CPI - commentary

Review , Issue May , Pages 107-111

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