This paper studies optimal UI policy from the perspective of worker assignment to heterogenous jobs in an environment of random matching. Workers react to UI policy through job acceptance decisions; firms react to UI policy through wage posting. There is endogenous assortative matching as a...

The introduction of firm size into labor search models raises the question how wages are set when average and marginal product differ. We develop and analyze an alternative to the existing bargaining framework: Firms compete for labor by publicly posting long- term contracts. In such a...

This paper reviews current issues in youth labour markets in developed countries. It argues that young people aged 16-25 have been particularly hard hit during the current recession. Using the USA and UK as cast studies, it analyses both causes and effects of youth unemployment using micro-data....

We consider a model of on-the-job search where firms offer long-term wage contracts to workers of different ability. Firms do not observe worker ability upon hiring but learn it gradually over time. With sufficiently strong information frictions, low-wage firms offer separating contracts and...

This article reviews the effects of the Great Recession on youth labour markets. We argue that young people aged 16-24 have suffered disproportionately during the recession. Using the USA and UK as case studies, we analyse youth unemployment using microdata. We argue that there is convincing...

This paper provides a novel justification for a declining time profile of unemployment benefits that does not rely on moral hazard or consumption-smoothing considerations. We consider a simple search environment with homogeneous workers and low- and high-productivity firms. By introducing a...

This paper analyzes an urn-ball matching model in which workers decide how intensively they sample job openings and apply at a stochastic number of suitable vacancies. Equilibrium is not constrained efficient; entry is excessive and search intensity can be too high or too low. Moreover, an...

The paper explores the consequences of macroeconomic policy for labor market outcomes in the presence of frictions. It shows how policy may be useful in overriding frictions, as well as how it might generate adverse outcomes. The analysis looks at the main tools of macroeconomic policy and...

This paper analyzes the joint dynamics of prices, output and employment across firms. We develop a dynamic equilibrium model of heterogeneous firms who compete for workers and customers in frictional labor and product markets. Idiosyncratic productivity and demand shocks have distinct...

Most economists maintain that the labor market in the United States (and elsewhere) is 'tight' because unemployment rates are low and the Beveridge Curve (the vacancies-to-unemployment ratio) is high. They infer from this that there is potential for wage-push inflation. However, real wages are...