This paper deals with the employment effects of reduced working time when firms' endogenous response of overtime is considered. The anal ysis distinguishes between fixed and profit-maximizing levels of outp ut as well as between interior and corner solutions. It is shown that under plausible...

In a bargaining model, we show that a decrease in the unemployment benefit level increases not only equilibrium employment, but also nominal wage flexibility, and thus reduces employment variations in the case of nominal shocks. Long-term wage contracts lead to higher expected real wages and...

A hallmark of modern labor economics is the close interplay between the development of theory, data sources, and econometric testing. The evolution of the economic analysis of unemployment insurance provides a good illustration. New theoretical approaches, in particular job-search theory, have...