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We propose a model of labor market sector self-selection that combines comparative advantage, as in the Roy model, and sector composition preference. Two groups choose between two sectors based on heterogeneous potential incomes and group compositions in each sector. Potential incomes incorporate group specific human capital accumulation and wage discrimination. Composition preferences are interpreted as reflecting group specific amenity preferences as well as homophily and aversion to minority status. We show that occupational segregation is amplified by the composition preferences and we highlight a resulting tension between redistribution and diversity. The model also exhibits tipping from extreme compositions to more balanced ones. Tipping occurs when a small nudge, associated with affirmative action, pushes the system to a very different equilibrium, and when the set of equilibria changes abruptly when a parameter governing the relative importance of pecuniary and composition preferences crosses a threshold.
We introduce and study the property of orthogonal independence, a restricted additivity axiom applying when alternatives are orthogonal. The axiom requires that the preference for one marginal change over another should be maintained after each margi
Timing decisions are common: when to file your taxes, finish a referee report, or complete a task at work. We ask whether time preferences can be inferred when textsl{only} task completion is observed. To answer this question, we analyze the followin
The potential impact of automation on the labor market is a topic that has generated significant interest and concern amongst scholars, policymakers, and the broader public. A number of studies have estimated occupation-specific risk profiles by exam
We study a finite horizon optimal contracting problem of a risk-neutral principal and a risk-averse agent who receives a stochastic income stream when the agent is unable to make commitments. The problem involves an infinite number of constraints at
In this paper we extend the work by Ryuzo Sato devoted to the development of economic growth models within the framework of the Lie group theory. We propose a new growth model based on the assumption of logistic growth in factors. It is employed to d