In this paper, I study the wage a firm sets to attract high abilityworkers (hipo's) in situationsof unemployment. I … show that the higher unemployment, the larger afirm's incentives to sorthigh and low ability workers. Moreover, workers … will signal their(high) ability in situationsof (high) unemployment only if a job offers a high enough wage. Themain result …

increase in the pace of job creation and destruction may have substantial effects on employment and unemployment;the effects … may be out of its unemployment equilibrium for quite a long time after a shock occurs.The novelty of the model is that it … takes explicitly account of the propagationof shocks through the various duration classes of unemployment andallows for …