Shimer (2005) showed that a standard search and matching model of the labor market fails to generate fluctuations of unemployment and vacancies of the magnitude observed in US data in response to shocks to average labor productivity of plausible magnitude. He also suggested that wage...

We develop a quantitative equilibrium model that features tax deductibility of employer-provided coverage, non-discrimination restrictions, fixed costs of coverage and firms that hire discrete numbers of workers in frictional labor markets. We use the calibrated model to understand what drives...

We develop a quantitative equilibrium model that features tax deductibility of employer-provided coverage, non-discrimination restrictions, fixed costs of coverage and employers that hire discrete numbers of workers in frictional labor markets. We use the calibrated model to understand what...

employment and average productivity.

The paper revisits the problem of wage bargaining between a firm and multiple workers. We show that the Subgame Perfect Equilibrium of the extensive-form game proposed by Stole and Zwiebel (1996a) does not imply a profile of wages and profits that coincides with the Shapley values as claimed in...

The paper revisits the problem of wage bargaining between a firm and multiple workers. We show that the Subgame Perfect Equilibrium of the extensive-form game proposed by Stole and Zwiebel (1996a) does not imply a profile of wages and profits that coincides with the Shapley values as claimed in...

We study welfare effects of public short-time compensation (STC) in a model in which firms respond to idiosyncratic profitability shocks by adjusting employment and hours per worker. Introducing STC substantially improves welfare by mitigating distortions caused by public unemployment insurance...

This paper investigates the ability of employment protection to generate its own political support. A version of the Mortensen-Pissarides model is used for this purpose. Under the standard assumption of Nash bargaining, workers value employment protection because it strengthens their hand in...

Differences in employment protection across countries appear to be quite persistent over time. One mechanism that could explain this persistence is the so called constituency effect: high employment protection creates a mass of workers in favor of maintaining high protection because deregulation...