unemployment, this paper theoretically investigates the importance of labor market duality on labor market volatilities. The new … insight is that duality leads to a non-linear reaction of unemployment volatility for both supply and demand shocks. A … subsequent empirical panel data analysis confirms the model predictions. Uncovering the non-linearity in unemployment volatility …

over time. Consistent with the theory, we find that industrial employment is more sensitive to shocks where labor …

the theory's predictions: industrial employment is more sensitive to shocks in areas where labor regulations are less …