We build an analytically and computationally tractable stochastic equilibrium model of unemployment in heterogeneous … countercyclical unemployment, and is simultaneously consistent with procyclical reallocation, countercyclical separations and a … negatively-sloped Beveridge curve. Moreover, the model exhibits unemployment duration dependence, which (when calibrated to long …

lack of compensating differentials for unemployment risk can arise in equilibrium when all workers are identical and firms … differ only in job security (i.e. the probability that the worker is not sent into unemployment). In a setting where workers … risky tail of the distribution of firm-level unemployment risk. Meanwhile, unemployment becomes persistent for low-wage and …