Popular characterizations of union preferences assume that the income of laid-off union members is exogenous. There is evidence, however, of intra-union distribution schemes such as severance payments, unemployment insurance, retraining arrangements and early retirement schemes. This paper...

This paper develops a simple model of employment, non-statutory redundancy pay and wage determination. An interesting feature of this model is that the contract curve is vertical. Some of the predictions of the model are confronted with the available British data on non-statutory firing costs,...

The systematic use of experience rating is an original feature of the US unemployment benefit system. In most states, unemployment benefits are financed by taxing firms in proportion to their separations. Experience rating is a way to require employers to contribute to the payment of...

A dynamic labour matching economy is presented, in which the unemployed are either entitled to unemployment insurance (UI) or unemployment assistance (UA), and the employees are either eligible for UI or UA upon future separations. Eligibility for UI requires a minimum duration of contributions...

The paper studies the effect of potential unemployment benefit duration on the length of unemployment spells in Austria. It takes advantage of a quasi-experimental situation, where potential benefit duration was extended in 1988 for elderly workers living in specific regions of the country. The...

This Paper examines the role of employment protection when firms learn over time about the value of the match. When parties can commit to future wages, equilibrium contracts stipulate positive severance payments as an instrument to induce efficient lay-off decisions and there is no room for...

The paper analyses complementarities among a variety of labour market policies. It shows: (a) that a wide range of labour market institutions (e.g. unemployment benefits, job security legislation and payroll taxes) have complementary effects on unemployment; and thus (b) that policies aimed at...

This paper surveys the use of search and matching models in macroeconomics. It outlines the standard model, discusses its extensions, presents alternative formulations, considers the empirical evidence, and studies applications to macroeconomic questions such as business cycles, growth, and...

In this paper, we present a matching model with adverse selection that explains why flows into and out of unemployment are much lower in Europe compared to North America, while employment-to-employment flows are similar in the two continents. In the model, firms use discretion in terms of whom...