In this study we consider a labor market matching model where firms post wage-tenure contracts and workers, both employed and unemployed, search for new job opportunities. Given workers are risk averse, we establish there is a unique equilibrium in the environment considered. Although firms in...

This paper considers optimal unemployment policy in a matching equilibrium with risk averse workers and unobserved job search effort. The Planner chooses unemployment benefits, taxes and job creation subsidies to maximise a Utilitarian welfare function. Optimal policy involves a trade-off...

This paper tests whether aggregate matching is consistent with unemployment being mainly due to search frictions or due to job queues. Using U.K. data and correcting for temporal aggregation bias, estimates of the random matching function are consistent with previous work in this field, but...

This paper tests whether aggregate matching is consistent with random matching or stock-flow matching. Using U.K. matching data and correcting for temporal aggregation bias, estimates of the random matching function are consistent with previous work in this field. The data however support the...

This paper characterises optimal unemployment insurance (UI) and optimal tax policy in an equilibrium matching framework where job search effort is unobserved by the Planner. Policy design takes into account congestion externalities (greater job search effort by an individual worker reduces the...

A rich but tractable variant of the Burdett-Mortensen model of wage setting behavior is formulated and a dynamic market equilibrium solution to the model is defined and characterized. In the model, firms cannot commit to wage contracts. Instead, the Markov perfect equilibrium to the wage setting...