Postel-Vinay and Robin' (2002) sequential auction model is extended to allow for aggregate productivity shocks. Workers exhibit permanent differences in ability while firms are identical. Negative aggregate productivity shocks induce job destruction by driving the surplus of matches with low...

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...