demand shocks lower wages, employment and increase unemployment under equilibrium conditions. Furthermore, the results show … effects, transitions from work to unemployment or inactivity (or vice versa) are considered exogenously in this literature … market although the return to pre-shock employment level depends on a number of factors related to the subsidy (such as …

unemployment in the country …

We extend the Diamond-Mortensen-Pissarides model of equilibrium unemployment to incorporate public-sector employment … unemployment rate, on the division of employment between the private and public sectors, and on the distributions of wages in the …. We calibrate our model to Colombian data and analyze the effects of public-sector wage and employment policy on the …