Standard models of equilibrium unemployment assume exogenous labour market institutions and flexible wage determination. This paper models wage rigidity and collective bargaining endogenously, when workers differ by observable skill and may adopt either individualised or collective wage...

We analyse the effect of skill mismatch in a search model of equilibrium unemployment with risk-neutral agents, endogenous job destruction, and two-sidedex-ante heterogeneity. First, we examine the interaction of labour market institutions and skill mismatch. We find that skill mismatch changes...

When the centre-left government came into power in Germany in 1998, a core promise of the new Chancellor, Schroeder, was to reduce the lack of jobs and to increase welfare. Facing persistently increasing unemployment rates from then on, the government finally launched “Hartz IV” in 2004; the...

Schon wenige Monate nach dem Fall der Berliner Mauer versprach der damaligeBundeskanzler Kohl den ostdeutschen Bürgern „blühende Landschaften“ binnen wenigerJahre. Hingegen muss 12 Jahre nach der Wiedervereinigung eine mehr als ernüchterndeZwischenbilanz des bisherigen ökonomischen...