local labour market is in close proximity of other labour markets, a local shock that increases unemployment may not lead to … lower pay rates if employers fear outward migration of their workers. Hence, the unemployment elasticity of pay will be …

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 …