-term unemployed. In this paper, we use an incomplete-market model with search unemployment to evaluate the macro-economic and welfare … German unemployment insurance system and resulted in a significant reduction in unemployment benefits for the long …-run (noncyclical) unemployment rate in Germany by 1.4 percentage points. We also find that the welfare of employed households increases …

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. …