In this paper we model a job-specific shock process in the matching model of unemployment with non-cooperative wage behaviour. We obtain endogenous job creation and job destruction processes and study their properties. We show that an aggregate shock induces negative correlation between job...

The massive increase in unemployment throughout the OECD since the early 1970s has led governments in many countries to introduce, or to expand, labour market policies such as training schemes, employment subsidies, public works or schemes of counselling or assistance in job search. Such...

We study a multi-sector model of growth with differences in TFP growth rates across sectorsand derive sufficient conditions for the coexistence of a balanced aggregate growth path, withall aggregates growing at the same rate, and structural change, characterized by sectoral laborreallocation....

We survey the microfoundations, empirical evidence and estimation issues underlying the aggregate matching function. Several microeconomic matching mechanisms have been suggested in the literature with some successes but none is generally accepted as superior to all others. Instead, an aggregate...

We study long-run trends in market hours of work and employment shifts across economic sectors driven by uneven TFP growth in market and home production. We focus on the structural transformation between agriculture, manufacturing and services and on the marketization of home production. The...

In this paper we highlight certain links between unemployment, savings and growth. Using a standard overlapping generations framework modified to incorporate matching frictions in the labour market and a technology capable of yielding unbounded endogenous growth, we show that the cross-country...

I model and simulate the effects of employment tax cuts on unemployment and wages in four equilibrium models: competitive, union bargaining, search and efficiency wages. I find that if the ratio of unemployment compensation to wages is fixed, the effect of the tax cut is mainly on wages. But if...

This paper studies the effect of the business cycle on poverty, drawing evidence from the United States, Great Britain, Sweden and Australia. Many of the poor in those countries are outside the labour market and for those inside, transfers are a large part of income. But unemployment and wage...

I study the role of company start-up costs for employment performance. The model is search equilibrium with a new concept for firms. Agents have an innate managerial ability and make a career choice to become either managers or workers. Managers set up firms, post jobs and match with workers....

Reduced-form tests of scale effects in markets with search, run when aggregate matching functions are estimated, may miss important scale effects at the micro level, because of the reactions of job searchers. A semi-structural model is developed and estimated on a British sample, testing for...