This paper studies ethnic discrimination in Germany's labour market with a correspondence test. We send two similar applications to each of 528 advertisements for student internships, one with a Turkish-sounding and one with a German-sounding name. A German name raises the average probability of a callback by about 14%. Differential treatment is particularly strong and significant in smaller firms at which the applicant with the German name receives 24% more callbacks. Discrimination disappears when we restrict our sample to applications including reference letters which contain favourable information about the candidate's personality. We interpret this finding as evidence for statistical discrimination.JEL classification: C93, J71.

We develop and analyze a labor search model in which heterogeneous firms operate under decreasing returns and compete for labor by publicly posting long-term contracts. Firms achieve faster growth by offering higher lifetime wages that attract more workers which allows to fill vacancies with higher probability, consistent with empirical regularities. The model also captures several other observations about firm size, job flows, and pay. In contrast to existing bargaining models, efficiency obtains on all margins of job creation and destruction, both with idiosyncratic and aggregate shocks. The planner solution allows a tractable characterization which is useful for computational applications.

The paper analyzes the dynamic properties of the neoclassical one-sector growth model with di!erential savings in the sense of Kaldor}Pasinetti. The economy exhibits unstable steady states and #uctuations if the income distribution varies su$ciently and if shareholders save more than workers. The paper analyzes in detail the dynamics for the case with a "xed proportions technology as well as with a smooth approximation. If the savings propensities di!er by an arbitrarily small amount, the system exhibits topological chaos in the sense of Li and Yorke for an open set of production functions. The analytical results are supplemented by numerical experiments.

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