General equilibrium analysis of layoff costs have had mixed messages on the implications for employment. This Paper brings out the economic forces at work and explains the disparate results. Specifically, we show that positive employment effects of layoff costs come through reducing labour...

Similar durations but lower flows into unemployment gave Europe lower unemployment rates than the United States until the 1970's. But since 1980, higher durations have kept unemployment rates in Europe persistently higher than in the U.S. A general equilibrium search model with human capital...