Standard models of equilibrium unemployment assume exogenous labour market institutions and flexible wage determination. This article models wage rigidity and the coverage of collective bargaining endogenously, when workers differ by observable skill and may adopt either individualised or...

Labour market reforms increasing flexibility 'at the margin' have been recently paying out in terms of employment growth. This article argues that two-tier labour market reforms have a transitional 'honeymoon', job creating effect. In a dynamic model of labour demand under uncertainty, the...