This paper investigates the border between formal employment, shadow employment, and unemployment in an equilibrium model of the labour market with market frictions. From the labour demand side, firms optimally create legal or shadow employment through a mechanism that is akin to tax evasion....

The Great Recession has indicated that firms' leverage and access to finance are important for hiring and firing decisions. It is now empirically established that bank lending is correlated to employment losses when credit conditions deteriorate. We provide further evidence of this drawing on a...

All OECD countries have either legally mandated severance pay or compensations imposed by industry-level bargaining in case of employer initiated job separations. According to the extensive literature on Employment Protection Legislation (EPL), such transfers are either ineffective or less...

This Paper studies the border between shadow employment and unemployment. It argues that the two macroeconomic phenomena are two faces of the same coin: any policy aimed at reducing the former will increase the latter. Theoretically, it proposes and solves a matching model of the labour market,...

For many students throughout the world the time to obtain an academic degree extends beyond the normal completion time while college tuition is typically constant during the years of enrollment. In particular, it does not increase when a student remains in a program beyond the normal completion...

This paper proposes a matching model that distinguishes between job creation by existing firms and job creation by firm entrants. The paper argues that vacancy posting and job destruction on the extensive margin, i.e. from firms that enter and exit the labour market, represents a viable...

This paper contributes to the empirical and theoretical knowledge of gross credit flows: the simultaneous process of credit expansion and contraction associated with a net change in the aggregate quantity of credit. Empirically, the paper summarizes heterogeneity in the banking industry by...

Employment Protection rules have two separate dimensions: a transfer from the firm to the worker to be laid off and a tax paid outside the firm-worker pair. It is well established that with full wage flexibility statutory severance payments (pure transfers) between employers and dismissed...

This paper proposes and solves a search unemployment model in which job separation requires mandatory notice. When jobs are subject to idiosyncratic uncertainty, firms would issue advance notice even with good business conditions. We show that such precautionary policy is not pursued if it...

This paper studies the joint distribution of wages and employment levels in simple matching models of job creation and destruction with costly search and firm-specific labour demand shocks. Existing evidence on the relationship between employer size, the mean and variance of employees' wages,...