productivity and a risky technology with productivity subject to sizeable shocks. Strict EPL makes the risky technology relatively … less attractive because it is more costly to shed workers upon receiving a low productivity draw. We calibrate the model … mechanism can explain a considerable portion of the slowdown in productivity in the EU relative to the US since 1995 …

reservation wages, shifting the labor force towards the more productive firms. The relation between productivity dispersion and UI … policy is mediated by the wage posting policies of firms that take both productivity and policy into account. Optimal UI … policy is shown to crucially depend on the properties of the firm productivity distribution, such as its variance and …