the assumption of a strictly nominal outside option (for instance, unemployment benefits) for the union. There is … conservative central banker is always optimal if the government can choose the level of unemployment benefits as well as the degree …

In this paper, I study the wage a firm sets to attract high abilityworkers (hipo's) in situationsof unemployment. I … show that the higher unemployment, the larger afirm's incentives to sorthigh and low ability workers. Moreover, workers … will signal their(high) ability in situationsof (high) unemployment only if a job offers a high enough wage. Themain result …