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. …

This paper develops a general equilibrium model with unemployment and noncooperative wage determination to analyze the … importance of incomplete markets when risk-averse agents are subject to idiosyncratic employment shocks. A version of the model … and unemployment but increases vacancies. Additionally, the model explains the average level of unemployment insurance …