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. …

affected by bank branch deregulation and employment protection occurring over 1972-1993. We find that financial liberalization …, employment protection promotes those industries that are more knowledge intensive, while the effect of financial liberalization … an efficiency channel, better reallocating resources across sectors, while employment protection creates higher …