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This paper adds two-sided ex-ante heterogeneity and a production technology inducing sorting to the canonical Diamond-Mortensen-Pissarides (DMP) search and matching model. Ex-ante heterogeneity and sorting have important implications for the dynamic properties of the model. The modifications...
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little employment protection and low unemployment benefits, while the European model (generous benefits and higher duration …
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increased flow into unemployment in a recession is mainly due to reduced hirings, and hence lower job-to-job transitions, rather …
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