interest rate shocks, search-matching frictions increase future employment uncertainty, improving workers’ incentive to save … larger fluctuations in the workers’ bargaining power while the interest rates shocks lead to variations in the firmsâ …

We propose a theory of low-frequency movements in unemployment based on asymmetric real wage rigidities. The theory … generates two main predictions: long-run unemployment increases with (i) a fall in long-run productivity growth and (ii) a rise …-run unemployment over the 1980s and its rise during the late 2000s. …