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 …

interact and affect the evolution of unemployment rates and participation rates, the two main indicators of labour market … performance. Our analysis has two special features. First, apart from the two labour market states – employment and unemployment … that a shock to the net flow from unemployment to employment drive the unemployment rate and the participation rate in …

This paper explores how the introduction of an experience rated system of unemployment insurance affects employment and … welfare in a model where implicit contracts between firms and workers give rise to wage rigidities and unemployment. In the … literature, it has been argued that experience rated systems of unemployment insurance may reduce long term employment as firms …