In this paper, we show how time-varying unemployment benefits can generate equilibrium wage dispersion in an economy in which identical firms post wages and homogeneous workers search for acceptable offers. We allow for matching frictions and for free entry and exit of vacancies, and we model...

In this paper, we show how time-varying unemployment benefits can generate equilibrium wage dispersion in an economy in which identical firms post wages and homogenous workers search for acceptable offers. We allow for matching frictions and for free entry and exit of vacancies, and we model...