This article analyses the design of optimal unemployment insurance in a search equilibrium framework where search effort among the unemployed is not perfectly observable. We examine to what extent the optimal policy involves monitoring of search effort and benefit sanctions if observed search is...

In June 1995, the Swedish parliament decided to cut the replacement rate in unemployment insurance from 80% to 75%, a change that took effect on 1 January 1996. The paper exploits a quasi-experimental feature of the benefit reform to examine the effect on job finding. We compare the evolution of...

Conventional models of equilibrium unemployment typically imply that pro-portional taxes on labor earnings are neutral with respect to unemployment as long as the tax does not affect the replacement rate provided by unem-ployment insurance, i.e., unemployment benefits relative to after-tax...

In this paper we introduce a general equilibrium model of search unemployment that incorporates absence from work as a distinct labor force state. Absenteeism is driven by random shocks to the value of leisure that are private information to the workers. Firms maximize profits while recognizing...

The paper presents the Swedish institutional setting, documents basic stylised facts about fixed--term contracts, and discusses the causes of their increased prevalence. Open--ended and temporary employment exhibit strikingly different cyclical behaviour with temporary employment being more...