This paper aims at explaining the dynamics of labor markets in Spain, especially the high persistence of unemployment and the Beveridge curve. We build a stochastic dynamic general equilibrium matching model, which assumes failures in the matching between vacancies and unemployed. We calibrate the model for the Spanish economy and simulate it considering two sources of exogenous shocks: a techn...

We analyze how the financial conditions of the firm affect the compensation structure of workers, the size of the firm, and its dynamics. Firms that are financially constrained offer long-term wage contracts characterized by an increasing wage profile, that is, they pay lower wages today in exchange of higher future wages, effectively borrowing from their employees. Because constrained firms al...

The reservation wage is an integral part of most theories of involuntary unemployment. We use panel data to examine the empirical determinants of the reservation wage — in particular the inßuence of previous wages — and consider what this implies for the evolution of the natural rate of unemployment. We Þnd that previous wages have a signiÞcant but relatively small effect on reservation wages (...

We consider a dynamic macroeconomic model with households that regard relative affluence as social status. The measure of relative affluence can be the ratio to, or the difference from, the social average. The two specifications lead to quite different results: with the ratio specification full employment is necessarily realized, whereas with the difference specification persistent shortages of...

This paper is motivated by the lack of any obvious relationship between aggregate poverty and unemployment in Great Britain. We derive a framework based on individuals’ risks of unemployment and poverty, and how these vary over the economic cycle. Analysing the British Household Panel Survey for 1991-96, we are able to square the micro evidence that unemployment matters for poverty with the mac...

We find that, across OECD countries, there is a strong link between the rate of self employment and the intensity of both productand labor-market regulations. The sensitivity of the self-employment rate to regulation appears greater in terms of statistical significance and magnitude than the sensitivity of unemployment. We then develop a model of rent creation and division featuring product and...

Extensions of unemployment insurance (UI) benefits have been implemented in response to the Great Recession. This paper measures the effect of these extensions on the unemployment rate using a calibrated structural model featuring job search and consumption-saving decisions, skill depreciation, and UI eligibility. The ongoing UI benefit extensions are found to have raised the unemployment rate ...

ABSTRACT We examine how exposure to international tax competition affects domestic firms’ employment. Consistent with prior work, we find evidence that reductions in foreign rates affect the competitive environment via increases import and investment foreign-owned subsidiaries. posit these changes can cause managers reduce their employment levels. our expectation, relative decreases negatively ...

This paper examines the impact of unemployment insurance (UI) on aggregate employment by exploiting cross-state variation in maximum benefit duration during Great Recession. Comparing adjacent counties located neighboring states, there is no statistically significant increasing UI generosity employment. Point estimates are uniformly small magnitude, and most precise rule out employment-to-popul...

This paper presents a novel and unique measure of cross-sectional uncertainty constructed from stock options on individual firms. Cross-sectional varied little between 1980 1995 subsequently had three distinct peaks—during the tech boom, financial crisis, coronavirus epidemic. has mixed relationship with overall economic activity, aggregate is much more powerful for forecasting growth. The data...