Abstract. I provide an economic interpretation to the entropy-based probabilistic models of network formation used in statistical physics. Specifically, I show how these models are nested in a wider class of network formation models where agents are rationally inattentive about the characteristics of other agents. I develop conditions for estimating these models and provide an application about the formation of R&D alliance networks.

Joint work with Francesco del Prato.

Abstract. In local labor markets, workers often move at early stages of their careers from lower-paying firms that provide them training, to better-paying, specialized fi rms. We call this mechanism “human capital value chain” and we document its implications on both workers’ page paths and local agglomeration externalities.