The impact of payroll taxes on unemployment and welfare are examined in a model with household production and union-firm wage bargaining. The analysis shows that unemployment typically falls as the payroll tax rate in the market sector for household substitutes (the service sector) is reduced....

A hallmark of modern labor economics is the close interplay between the development of theory, data sources, and econometric testing. The evolution of the economic analysis of unemployment insurance provides a good illustration. New theoretical approaches, in particular job-search theory, have...

The authors examine alternative systems of financing unemployment insurance benefits in an economy with wage-sett ing unions, where, as in some Nordic countries, each union runs its o wn unemployment insurance system. It is shown that a higher lump-sum grant to the union's unemployment insurance...

In this paper we introduce a general equilibrium model of search unemployment that incorporates absence from work as a distinct labor force state. Absenteeism is driven by random shocks to the value of leisure that are private information to the workers. Firms maximize profits while recognizing...