labor market institutions may sometimes favor physical and human capital investments in second-best environments. …

little employment protection and low unemployment benefits, while the European model (generous benefits and higher duration …

Labor market frictions are not the only possible factor responsible for high unemployment. Credit market imperfections … European and US unemployment differ so much when labor markets have become more similar at the margin in Europe and the US. To …

This paper explicitly differentiates between unemployment and inactivity, by defining inactivity as a state in which … of large flows between employment, unemployment and inactivity. Secondly, it shows that unemployment and aggregate wages … individuals do not search for jobs when non-employed. Facing changes in the value of inactivity, individuals transit through three …

The Mortensen-Pissarides model with unemployment benefits and taxes has been able to account for the variation in … unemployment rates across countries but does not explain why geographical mobility is very low in some countries (on average, three … times lower in Europe than in the U.S.). We build a model in which both unemployment and mobility rates are endogenous. Our …

Unemployment may depend on equilibrium in other markets than the labor markets. This paper adresses this old idea by … effect of financial frictions on equilibrium unemployment is amplified by goods market frictions and vice versa. …