In this paper, we develop a dynamic model of firm-level bargaining, along the lines of Manning (1993). In this context, we provide a firm level wage equation that explicitly accounts for firm heterogeneity. This wage equation explains inter-firm wage differentials by differences in labour...

In this paper we construct a simple model of the effects of immigration on the labour market outcomes of natives. In this model, skilled and unskilled labour are substitutes, immigrants are complementary to the former, and wages are determined by bargaining. We are able to prove that,...

This paper presents a case study on reforming a very dysfunctional labour market with a deep insider-outsider divide, namely the Spanish case. We show how a dual market, with permanent and temporary employees makes real reform much harder, and leads to purely marginal changes that do not alter...

This paper analyzes the strikingly different response of unemployment to the Great Recession in France and Spain. Their labor market institutions are similar and their unemployment rates just before the crisis were both around 8%. Yet, in France, unemployment rate has increased by 2 percentage...

This Paper considers a matching model of heterogeneous workers and jobs, which includes on-the-job search. High-educated workers transitorily accept unskilled jobs and continue to search for skilled jobs. We study the implications of this model for the unemployment rates of high and low-educated...

The systematic use of experience rating is an original feature of the US unemployment benefit system. In most states, unemployment benefits are financed by taxing firms in proportion to their separations. Experience rating is a way to require employers to contribute to the payment of...

The Nash wage bargaining model is ubiquitous in modern labour economics. Yet most applications of this model ignore inter-employer competition for labour services and attribute all of the workers’ rent to their bargaining power. In this Paper, we write and estimate an equilibrium model with...