The current 2007-2010 recession has witnessed two phenomena that standard search models of the labor market have diculty reconciling: a large and persistent increase in unemployment and a sharp rise, above pre-recession levels, in labor productivity following a small initial drop. In addition,...

This paper studies the impact of unions on wage inequality, output and unemployment. To do so, it proposes a search and matching model of union formation in which unions arise endogenously through a voting process within firms. In a union firm, workers bargain their wages collectively. In a...