I investigate the wage and employment effects of taking up interim jobs after displacement. Proposing a novel approach, I decompose the wage losses along the distribution into a channel due to the take up of interim employment and a channel which accounts for all other factors. I find that being...

This paper develops a model of search on the labour market with training. The model reveals how the tax system can restore the social optimum if the Hosios condition is not satisfied in the private equilibrium. Furthermore, the effects are explored of a second-best reform from average to...