We consider a segmented labor market characterized by a Shapiro-Stiglitz efficiency wage setting in both sectors. However, the primary sector and the secondary sector differ in the firing cost which induces a wage diffential. We suppose also a heterogeneous labor force characterized by the...

This paper re-examines the effects of population aging and pension reforms in an OLG model with labor market frictions. The most important feature brought about by labor market frictions is the connection between the interest rate and the unemployment rate. Exogenous shocks (such as aging)...

We incorporate on-the-job search (OTJS) into a real business cycle model in order to study whether OTJS increases the cyclical volatility of unemployment and vacancies. The increased search of employed workers during expansions has two effects on the unemployed: it induces firms to openmore...