We explore the role of real wage dynamics in a New Keynesian business cycle model with search and matching frictions in the labor market.Both job creation and destruction are endogenous.We show that the model generates counterfactual inflation and labor market dynamics.In particular, it fails to...

This paper investigates how a mandatory activation program in Denmark affects the job finding rate of unemployed workers.The activation program was introduced in an experimental setting where about half of the workers who became unemployed in the period from November 2005 to March 2006 were...

This paper stresses the importance of a specification of the matching function in which the measure of job matches corresponds to the measure of job searchers. In many empirical studies on the matching function this requirement has not been fulfilled because it is difficult to find information...

This paper demonstrates that cyclical and chaotic planning solutions are possible in the standard textbook model of search and matching in labor markets. More specifically, it takes a discretetime adaptation of the continuous-time matching economy described in Pissarides (1990, 2001), and...

This paper analyzes the design of optimal unemployment insurance in a search equilibrium framework where search effort among the unemployed is not perfectly observable.We examine to what extent the optimal policy involves monitoring of search effort and benefit sanctions if observed search is...

This paper explores the optimal interaction between the tax system and unemployment compensation in insuring people against the risks of involuntary unemployment and low ability.To that end, we introduce search unemployment in a model of optimal non-linear income taxation.We find that the...