We develop a model featuring search frictions and a nondegenerate labor supply decision along the extensive margin, and argue that it does a reasonable job of matching labor market flows between employment, unemployment and out of the labor force. Persistent idiosyncratic productivity shocks...

This paper analyzes the welfare effects of the change in unemployment insurance benefits in three general equilibrium incomplete market models. In particular, it decomposes the total effect for each individual into different factors. In all of the models that I consider, the consumers face an...

This paper analyzes the implications of plant-level dynamics over the business cycle. We first document basic patterns of entry and exit of U.S. manufacturing plants, in terms of employment and productivity, between 1972 and 1997. We show how entry and exit patterns vary during the business...

This paper explores the asset-price implications in economies where there is no direct insurance against idiosyncratic risks but there are other assets---such as a riskfree bond or equity---that can be used for self-insurance, subject to exogenously imposed borrowing limits. We analyze an...

In this paper, we study nonemployed workers' job search behavior. In particular, we analyze how search behavior changes over the business cycle. Theoretically, we show that job search intensity can either be procyclical or countercyclical depending on various factors. Empirically, we first...

We study a political economy model of entry barriers. Each period the policymaker determines whether to impose a high barrier on entry, and the special interest groups try to influence the policymaker's decision. Entry is accompanied by creative destruction— when many new firms enter, old...

This paper reconsiders the cost of business cycles under incomplete markets. Primarily, we focus on the heterogeneity in the cost of business cycles among agents with different skill levels. Unskilled workers are subject to a much larger risk of unemployment during recessions than are skilled...

This paper examines the causes of the observed increase in the average duration of unemployment over the past thirty years. First we analyze whether changes in the demographic composition of the U.S. labor force, particularly the age and gender composition, can explain this increase. We then...

This paper formulates Rosenberg's (1982) "learning by using" as a stochastic process. The producer of machines learns from the experience of users. Due to this learning, the quality of machines improves over time. It turns out that the process of this improvement approximately takes an...

This paper examines the causes of the observed increase in the average unemployment duration over the past thirty years. First we analyze if changes in the demographic com- position of the U.S. labor force can explain this increase. In particular, we examine how much of the observed change can...