The standard Walrasian equilibrium theory requires that the marginal value product of production factor such as labor is equal across firms and industries. However, productivity dispersion is widely observed in the real economy. Search theory allegedly fills this gap by encompassing apparent...

This paper examines the impacts on reservation wages of unemployed persons and on transition in employment due to the reform of the unemployment insurance system in Germany in the course of the Agenda 2010. A dynamic search model is developed, on which reservation wages are simulated for...