The sustainability of Welfare States requires high employment/high participation to raise the tax base and avoid distortions. To analyse labour market participation decisions in a world with market frictions, we propose and solve a three-state macro model of the labour market. We show that...

Credit market imperfections influence the labor market and aggregate economic activity. In turn, macroeconomic factors have an impact on the credit sector. To assess these effects in a tractable general-equilibrium framework, we introduce endogenous search frictions, in the spirit of Peter...

We show a fundamental property of human capital investments : they are not independent of the aggregate state of labor markets. In particular, frictions and slackness of the labor market raise the returns to specific human capital investments relative to general investments. This is a property...

In the North of Europe, club membership is higher than in the South, but the frequency of contacts with friends, relatives and neighbors is lower. We link this fact to another one: the low geographical mobility rates in the South of Europe relative to the North. To interpret these facts, we...

Employment protection (EPL) has a well known negative impact on labor flows as well as an ambiguous but often negative effect on employment. In contrast, its impact on capital accumulation and capital-labor ratio is less well understood. The available empirical evidence suggests a hump-shaped...