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 study aggregate equilibrium dynamics of a frictional labor market where firms post employment contracts and workers search randomly on and off the job for such contracts, while the economy is hit by aggregate productivity shocks. Our exercise provides the first analysis of aggregate dynamics...