This paper considers a dynamic matching model with imperfectly observable worker effort as in Shapiro and Stiglitz (1994). In our economy the no-shirking condition endogenously imposes real wage rigidity on the matching market. This generates "contractual fragility" and inefficient separations...

This paper aims at analyzing the welfare effects of allowing different levels of flexibility in the choice of the numbers of hours worked (part-time, full-time, extra-time). To do so we consider a setting with bargaining frictions, partially indivisible labor, heterogeneous agents and firms, and...

In this paper, we present an agent-based, evolutionary, model of output- and labor-market dynamics. Firms produce a homogeneous, perishable, good under constant returns to scale using labor only. Workers are skill-homogeneous and buy the good spending all their wage. Labor productivities are...

This paper reevaluates the quantitative performance of the standard labor-market matching model developed by Mortensen and Pissarides with special attention to the behavior of vacancies, one of the key variables in the model. I first estimate trivariate vector autoregressions with gross worker...

This paper studies the cyclical properties the standard Mortensen-Pissarides model of labor search and matching embedded in the real business cycles model with capital, risk-averse agents, and lack of private insurance against unemployment risk. The model enables a direct comparison between the...

I reconcile macro- and micro-evidence on price setting in a search and matching framework. Search frictions lead price-setting firms to negotiate wage rates with their employees. In contrast to the existing macro-labor literature, I assume that wage-bargaining and price-setting occur in the same...

This paper develops and solves a general equilibrium business cycle model with on-the-job search and wage rigidity arising from long-term labor contracts. Labor search models without these features have been criticized for failing to generate procyclical movements in job vacancies and...

This paper studies the implications of labor taxation in determining the sensitivity of an economy to macroeconomic shocks. We construct a New Keynesian business cycle model with matching frictions of the labor market, where sluggish employment adjustment implies a key role for labor markets in...