a b s t r a c tIn the North of Europe, club membership is higher than in the South, but the frequency of contacts with friends, relatives and neighbors is lower. We link this fact to another one: the low geographical mobility rates in the South of Europe relative to the North.To interpret these facts, we build a model of local social capital and mobility. Investing in local ties is rational when workers do not expect to move to another region. We find that observationally close individuals may take different paths characterized by high local social capital, low mobility and high unemployment, vs. low social capital, high propensity to move and higher employment probability. Employment protection reinforces the accumulation of local social capital and thus reduces mobility.European data supports the theory: within a country and at the individual level, more social capital is associated with lower mobility.

We estimate and report life-cycle transition probabilities between employment, unemployment and inactivity for male and female workers using Current Population Survey monthly files. We assess the relative importance of each probability in explaining the life-cycle profiles of participation and unemployment rates using a novel decomposition method. A key robust finding is that most differences in participation and unemployment over the life-cycle can be attributed to the probability of leaving employment and the probability of transiting from inactivity to unemployment, while transitions from unemployment to employment (the job finding probability) play secondary roles. We conclude that search models that seek to explain life-cycle work patterns should not ignore transitions to and from inactivity.

This paper studies the impact of sanitary protocols aimed at reducing the contagion by Covid-19 during the production and consumption of goods and services. We augment a heterogeneous SIR model with a two-way feedback between contagion and economic activity, allowing for firm and sector heterogeneity. While protocols are a burden for firms (especially SMEs), they may enhance economic activity by avoiding infections that reduce the labor supply. Using Chilean data, we calibrate the model and assess the impact of recommended firm protocols on contagion and economic activity in the after-lockdown period. Our quantitative results suggest that: (i) A second wave of infections is likely in the absence of protocols; (ii) Protocols targeted at some sectors can reduce deaths while at the same time improving economic conditions; (iii) Protocols applied widely have a negative effect on the economy. We also find that applying strict protocols to a few sectors is generally preferable to applying milder protocols to a larger number of sectors, both in terms of health and economic benefits.

We study the quantitative impact of a rise in the minimum wage on macroeconomic outcomes such as employment, the stock of capital and the distribution of wages. Our modeling framework is the large-firm search and matching model. Our comparative statics are in line with previous empirical findings: a moderate increase in the minimum wage barely affects employment, while it compresses the wage distribution and generates positive spillovers on higher wages. The model also predicts an increase in the stock of capital. Next, we perform the policy experiment of introducing a 10 dollar minimum wage. Our results suggest large positive effects on capital (4.0%) and output (1.8%), with a decrease in employment by 2.8%. The introduction of a 9 dollar * An earlier version of this paper circulated under the title "The impact of the minimum wage on capital accumulation and employment in a large-firm framework". We would like to thank Ayse Imrohoroglu (the editor) and a referee for their comments, which greatly improved the previous version of this draft. We also grateful to Felipe Balmaceda, Wouter den Haan, Markus Poschke, Toshi Mukoyama, Shouyong Shi, Lucciano Villacorta and Etienne Wasmer for useful comments, as well as participants at the Winter Econometric Society Meeting in Los Angeles, the European Economic Association Meeting in Toulouse, the CEF conference in Vancouver, the Econometric Society conference in Sao Paolo and EALE conference in Bonn, the SMAUG workshop, and seminar participants at Banque de France, Central Bank of Chile, UDP, USACH, PUC-Chile and CEA. We acknowledge funding from the Anillo in Social Sciences and Humanities (project SOC 1402 on "Search models: implications for markets, social interactions and public policy"). Alexandre Janiak also thanks Fondecyt (project no 1151053). All errors are our own. minimum wage would instead produce similar effects on capital accumulation without harming employment.

Artículo de publicación ISIWe estimate life-cycle transition probabilities among employment, unemployment and inactivity for US workers. We assess the importance of each worker flow to account for participation and unemployment rates over the life cycle. We find that inactivity exit and entry matter but the empirically relevant margins defy conventional wisdom: high youth unemployment is due to high employment exit probabilities, while low labour force entry probabilities substantially account for low participation and unemployment among older workers. Our results remain intact under several forms of heterogeneity, time-aggregation bias and misclassification errors.Spanish Ministry of Economy and Competitiveness ECO2012-32392 Severo Ochoa Programme for Centres of Excellence in RD SEV-2011-0075 Fondecyt 1120593 1111045

Employment volatility is larger for young and old workers than for the prime aged. At the same time, in countries with high tax rates, the share of total hours supplied by young/old workers is lower. These two observations imply a negative correlation between government size and business cycle volatility. This paper assesses in a heterogeneous agent OLG model the quantitative importance of these two facts to account for the empirical relation between government size and macroeconomic stability.

We analyze the welfare cost of inflation in a model with cash-in-advance constraints and an endogenous distribution of establishments' productivities. Inflation distorts aggregate productivity through firm entry dynamics. The model is calibrated to the United States economy and the long-run equilibrium properties are compared at low and high inflation. We find that increasing the annual inflation rate by 10 percentage points above the average rate in the U.S. would result in a fall in average productivity of roughly 1.3 percent. This decrease in productivity is not innocuous: it is responsible for about one half of the welfare cost of inflation. * The authors thank Riccardo DiCecio and Julia Thomas for helpful comments. We have also benefited from the comments of seminar participants at ECARES, Federal Reserve Bank of St. Louis, University of Minho and University of Warwick. All remaining errors are our own. Alexandre Janiak thanks Fondecyt for financial support.

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