This paper provides strategic foundations for the insight that the bargaining power of employees depends on the firm's labor turnover costs. The analysis shows how these costs determine the firm's degree of substitutability between two sets of wage negotiations: (i) those the firm conducts with...

The message of this paper can be summarized in two simple points: (i) A wide range of labor market institutions - including unemployment benefits, job security legislation and payroll taxes - have complementary effects on unemployment, (ii) Thus a correspondingly wide range of labor market...

The paper explores the influence of job security provisions on employment and unemployment. We show that this influence depends on the persistence of macroeconomic fluctuations to which the labor market is exposed, and on employees' bargaining power in wage negotiations. Specifically, costs of...

This paper explores the optimal design of subsidies for hiring unemployed workers ("employment vouchers" for short) in the context of a simple macroeconomic model of the labor market. Focusing on the short-term and long-term effects of the vouchers on employment and unemplkoyment, the analysis...

This paper reviews a new approach to the design of unemployment policies. It focuses on polciies that have become an increasingly popular weapon against long-term unempoloyment, namely, policies that subsidize the hiring of the long-term unemployed. Whereas the existing literature usually...