mandated unemployment insurance (UI) and employment protection (EP). To illuminate the forces in these models, we study how UI … higher layoff taxes suppress frictional unemployment in less turbulent times, prevails in the models with labour market … impossible to include generous government-supplied unemployment insurance in that model without getting the unrealistic result …

role to cross-country differences in social unemployment insurance institutions that Prescott argues can be safely ignored …

This paper reviews the argument that high long-term unemployment in Europe is caused by generous social safety nets in … theoretical arguments that establish a link between turbulence and high unemployment. We conclude that a cure to the European … unemployment problem must entail a reform of the unemployment insurance system so that benefits decline over the unemployment spell …