We develop an equilibrium search-matching model with risk-neutral agents and two-sided ex-ante heterogeneity. Unemployment insurance has the standard effect of reducing employment, but also helps workers to get a suitable job. The predictions of our simple model are consistent with the...

We study the emplyment and distributional effects of regulating (reducing) working time in a general equilibrium model with search-matching frictions. Job creation entails some fixed costs, but existing jobs are subject to diminishing returns. We characterize the equilibrium in the de-regulated...

This paper begins from the twin observation that on the one hand, privatization which leaves control in the hands of the insiders has produced little restructuring while on the other, state-owned enterprises have engaged in some restructuring even in the absence of a clear prospect of...

This paper offers an alternative theory for the increase in unemployment and wage inequality experienced in the United States over the past two decades. In my model firms decide the composition of jobs and then match with skilled and unskilled workers. The demand for skills is endogenous and an...

To the layperson, the upward trend in European unemployment is related to the slowdown in economic growth. We argue that the layperson’s view is correct. The increase in European unemployment and the slowdown in economic growth are related because they stem from a common cause: an excessively...

We develop a general equilibrium analysis of the impact of active labour market policy on unemployment, wages and the welfare of the employed. This framework is used to assess the political support in favour of such policies and to relate it to the working of such policies and other parameters...

In Portugal real wage flexibility, at the macroeconomic level, is noticeably higher, while unemployment duration is lower, when compared to Spain. This suggests that the hardship of being unemployed is higher in Portugal. Unemployment benefits and family insurance, which are the main buffer...

The paper examines the implications of an important aspect of the ongoing reorganization of work – the move from occupational specialization towards multi-tasking – for centralized wage bargaining. The analysis shows how, on account of this reorganization, centralized bargaining becomes...

Before the early 1970s generous welfare states seemed to be consistent with high employment. Since then, there has been growing concern over disincentive effects of social insurance. This paper suggests that the problem may have arisen in part because European nations were in effect trying to...

This paper describes an equilibrium labour market in which an unemployment benefit system cannot raise the average value of being unemployed in the long run. It proposes an alternative benefit system which pays generous benefit rates when unemployment is high, but pays much lower rates in booms....