This paper proposes a multi-industry trade model with integrated capital and goods markets. Labor market imperfections in line with Mortensen and Pissarides (Job Creation and Job Destruction in the Theory of Unemployment, 1994) give rise to unemployment and a channel for the government to influence markets through institutional changes. Labor market interventions feedback into the product marke...

We study whether the effects on registered manufacturing output of dismantling the License Raj — a system of central controls regulating entry and production activity in this sector — vary across Indian states with different labor market regulations. The effects are found to be unequal across Indian states with different labor market regulations. In particular, following delicensing, industries...

This paper presents an easily understood example of a labor market that is useful in introducing how wages and rents are determined, using professional baseball as the context. The mechanics of a competitive labor market are outlined and an empirical analysis of the major league baseball (MLB) labor market is described. An example out-of-class exercise investigating whether baseball player sala...

This paper indicates that East Germany’s unemployment originates primarily in the labor market, caused by the fast wage adjustment after German reunification. We model the resulting labor market traps in a search and matching framework, show that they are difficult to overcome, and provide empirical evidence. We argue that under these circumstances, demand-side policies are effective mainly whe...

It has long been argued (Blanchard et al., 1992; Blanchard and Katz, 1997) that shifts in local labor market conditions, geographic variation in labor force demographics (labor supply), and sectoral shifts in industrial patterns (labor demand) might influence the natural rate of unemployment. On the supply side of the labor market this could occur through divergent trends in differential attach...

The paper extends Lucas and Prescott’s (1974) search model to develop a notion of rest unemployment. The economy consists of a continuum of labor markets, each of which produces a heterogeneous good. There is a constant returns to scale production technology in each labor market, but labor productivity is continually hit by idiosyncratic shocks, inducing the costly reallocation of workers acros...

Income Support Systems, Labor Market Policies and Labor Supply: The German Experience In view of the demographic trends, most EU countries face the problem of a declining work force in the future. Understanding the interaction between income support systems (such as unemployment benefits, social assistance, early retirement and pension systems) and total labor supply is of crucial importance to...