small reduction in the unemployment benefits, or introducing a small cash bonus for workers that get a new job, may have no … e.ect on unemployment in some cases, while eradicating significant levels of unemployment in other cases. Our analysis … multiple equilibria may exist in a game involving both workers and an unemployment-averse government. Furthermore, we explore a …

unionized sector creates unemployment whenever the union wage exceeds the competitive wage. Government intervention can increase … both the equilibrium amount of unemployment and worsen the intersectoral allocation of labour, because of the induced … change in the endogenous wage. Unemployment weakens but does not eliminate the possibility of a "labour-management conspiracy." …