On the job search is a key feature of real life labor markets. Yet, traditional equilibrium unemployment theory has not been able to account for on-thejob search in a satisfactory manner. In this paper we present an equilibrium model which includes on-thejob search as an optimal response to search frictions and differences in firm productivity. Our model is laid out in detail in ongoing researc...

This paper characterizes the optimal labor market policy within a dynamic search model of the labor market which allows for workers’ risk aversion. In a …rst-best allocation of resources, unemployment bene…ts should provide perfect insurance against the unemployment risk, layo¤ taxes are necessary to induce employers to internalize the cost of dismissing an employee but should not be too high i...

This study investigates how shocks in economic conditions at entry into the labour market affect wages of low and medium-skilled workers over a large part of their careers. We use detailed German employment data in which we follow a large sample of workers from entry up to 19 years in the labour market. Long-term effects of initial economic conditions on wages are identified using variation in ...

In this paper, we apply search theory to ana lyze the determinants of job search success as measured by the wages earned by re-employed male and female Polish workers after a spell of unemployment in 1994-2001. In addition to a general examination of postunemployment earnings, this study focuses on several specific themes. In particular, we investigate (i) if the receipt of unemployment benefit...

The relationship between wage inflation and unemployment has been extensively investigated since the early work of Phillips [Phillips, A.W., 1958. The relation between unemployment and the rate of change of money wage rates in the U.K. 1861–1957. Economica 25, 283–299] and Lipsey [Lipsey, R.G., 1960. The relation between unemployment and the rate of change of money wage rates in the U.K. 1861–1...

In this paper we de ne and estimate measures of labor market imperfection in the context of an equilibrium search and matching framework. The method uses readily available data on distributions of unemployment and job durations and wages. We estimate an index of search frictions, the magnitude of structural and frictional unemployment, and the average monopsony power of rms, and we examine the ...

Throughout the OECD, the operations of labour markets in the 1970s and 1980s have produced outcomes unfavourable to labour in general and unskilled labour in particular. In the US, this has been reflected in declining real wages, with a slight increase in the unemployment rate. In other countries, it has been reflected in a slowdown in real wages growth and a severe increase in unemployment. At...

S ince 2008, the periphery of Europe has been suffering an economic contraction of a magnitude that in several countries is comparable to the US Great Depression. During the early 2000s, the periphery of Europe enjoyed rapid growth in domestic demand, wages, and employment. Much of this bonanza was fueled by large international capital infl ows. Figure 1 displays the current account, nominal ho...

This study examines the differential effects of the unemployment rate at labor market entry, defined as the time of leaving school, on subsequent wages across gender and race using the National Longitudinal Survey of Youth 79. Results suggest that the negative effect of a recession at entry on wages is weaker for women. The differences between blacks and whites are not statistically significant...

In this paper we de ne and estimate measures of labor market imperfection in the context of an equilibrium search and matching framework. The method uses readily available aggregate data on marginal distributions of unemployment and job durations and wages. We estimate an index of search frictions, the magnitude of structural and frictional unemployment, and the average monopsony power of rms, ...