In this paper we examine different types of labour policies in the benchmark model of DMP in both cases where job-destruction rate is exogenous and endogenous. Our theoretical results show that the labour market tightness and the unemployment rate would be more volatile if job-destruction is...

In this paper we introduce efficiency wage relation in the benchmark model of DMP where worker’s efficiency depends on the wage rate and the labour market tightness. We also examine the parametric effects on the Nash-wage rate, market tightness and on the equilibrium unemployment rate. Our...

This paper introduces efficiency wage relation and assumes endogenous job destruction in the benchmark DMP model. A comparative static analysis has also been made which shows that most of the results obtained in the DMP model get altered in the extended model