We extend the benchmark model of Aghion and Blanchard (1994), assuming two segments of the emerging private sector that differ in workers' productivity. We look at the paths of employment, wages, taxes, labor costs and profits during and after the transition, up until the shock is fully...

Over the past several decades, the rate at which regular unemployment insurance recipients run out of benefits before they have found jobs, even in a strong labor market, has been gradually rising. For example, in 1973, 27.4 percent of UI recipients exhausted their benefits; in 2007 (with a...