The aggregated incidence of bilateral trade costs is derived from the gravity model. Incidence is equivalent to a TFP penalty. Sectoral and national differences in TFP have sharp implications for the equilibrium pattern of production and trade in a specific factors model of production. Unskilled labor is intersectorally mobile. Skilled labor acquires sector specific skills. Productivity shocks ...

We study the constrained Pareto efficient allocations in a dynamic production economy in which the group that holds political power decides the allocation of resources. We show that Pareto efficient allocations take a quasi-Markovian structure and can be represented recursively as a function of the identity of the group in power and updated Pareto weights. For high discount factors, the economy...

Intracolonial conflict among ant workers can establish a reproductive hierarchy, with top-ranking individuals often securing oviposition opportunities. Here we show that in the ant Odontomachus brunneus, reproduction-based dominance interactions control worker movement and location, and that this, in turn, mechanistically governs task allocation within the colony and establishes a division of l...

This paper constructs a recursive utility version of a canonical Merton (1971) model with uninsurable labor income and unknown income growth to study how the interaction between two types of uncertainty due to ignorance affects strategic consumption-portfolio rules and precautionary savings. Specifically, after solving the model explicitly, we theoretically and quantitatively explore (i) how th...

We develop a multi-sector model of labor markets in developing countries in which workers can be in any of four states i) employed in the formal urban sector, ii) employed in the informal urban sector, iii) unemployed in the urban sector or, iv) employed in agriculture. Workers differ in the productivity of formal sector employment and there are floor wages below which firms can’t set wages. Mi...

With the increasing of labor salaries, the RMB exchange rate, resource product prices and requirements of environmental protection, inexpensive labor and land are no longer the decisive factor of regional competitiveness. From this perspective, China needs to shift from the extensive development mode to the sustainable development mode. Science and technology resources rational allocation is on...

We study a model in which management and a union bargain sequentially, first choosing a rule that will later determine the level of employment, and then choosing a wage. The government then chooses an output or an employment subsidy. An exogenous natural turnover rate in the unionized sector creates unemployment whenever the union wage exceeds the competitive wage. Government intervention can i...