This paper develops a dynamic general equilibrium dual labour market model which incorporates both efficiency wages and union bargaining with monopolistically competitive firms. In one sector, a traditional sector produces a homogeneous good and firms face perfect competition on the product...

The recent labour-market performance varies greatly between the United States and continental Europe on the one hand, and between the low- and high-skilled on the other. This book starts by presenting up-to-date empirical evidence on these stylised facts and on the importance of the intensity of...