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...

The long-term equilibrium unemployment rate has returned to the center of the economic debate in France. It derives from two macroeconomic equations. Wages are the result of wage bargaining on the labor market (wage-setting equation) and firms set the corresponding level of employment...