This paper analyzes unemployment dynamics in the French, Dutch, and U.K. labor market. It presents a method to distinguish between the effects of duration dependence and unobserved heterogeneity on the exit rate out of unemployment. It turns out that for British male unemployed there is strong...

In this paper, the authors examine a rather popular eyeball check which has been used to establish the presence of state dependence in aggregate unemployment duration data. They correct the literature by showing that this check may well lead to wrong conclusions.

We show how time-varying unemployment benefits can generate equilibrium wage dispersion when identical firms post wages and homogeneous risk-averse workers search for jobs. We model a two-tier system similar to real-world UI programmes. The unemployed initially receive benefit "b". Eventually,...

In this article, we build an equilibrium search and matching model of an economy with an informal sector. Our model extends <link rid="b20">Mortensen and Pissarides (1994)</link> by allowing for "ex ante" worker heterogeneity with respect to formal-sector productivity. We use the model to analyse the effects of labour...