A firm that wants innovation must attract workers whose suitability for exploration it cannot observe. Any contract that attracts explorers is also open to exploiters. In a two-period model with hidden actions, explorers and exploiters generate different performance histories. The firm therefore screens by placing pay on histories relatively more likely under the intended activity than under...

We develop a dynamic household finance model showing that student loans --  non-dischargeable in the U.S. bankruptcy -- alleviate the well-documented debt overhang in labor supply decisions. Non-dischargeability mutes opportunities for households to strategically reduce labor supply at the expense of creditors, thus mitigating incentive distortions. This effect, however, is partially undone by Income-Driven Repayment (IDR) plans, which set student loan payments formulaically regardless of...