There is more resistance to layoffs in continental Europe than in the U.S. At the same time, there is some evidence that employed European workers are more productive than their American counterparts. We reconcile these two facts by proposing that some institutions, such as Employment Protection...

Wage determination under asymmetric information generates ine¢ ciencies due to excess turnover. Severance pay and layo¤ taxes can improve e¢ ciency. We show that inefficient separations can even be fully removed with …xed separation taxes in the case where therelevant private information is...

We argue that the main difference between European and American labor markets is not so much in the unemployment rates, but maybe more importantly in the reduced flows into and out of unemployment, in Europe. Employment protection legislations (EPL) have been extensively studied in the...

There is more resistance to layoffs in continental Europe than in the U.S. At the same time, there is some evidence that employed European workers are more productive than their American counterparts. We reconcile these two facts by proposing that some institutions, such as Employment Protection...

Wage determination under asymmetric information generates ine¢ ciencies due to excess turnover. Severance pay and layo¤ taxes can improve e¢ ciency. We show that inefficient separations can even be fully removed with …xed separation taxes in the case where therelevant private information is...

We study the relation between international trade and the gains to reform labor markets by removing firing restrictions. We find that trade linkages imply substantially smaller benefits to reform than those calculated in the closed economy general equilibrium model of Hopenhayn and Rogerson...

A labor market model under search frictions is developed, where participants are heterogeneous in productivity and the decision of which type of agents to match with is endogenized. Two applications are studied. It is observed that countries with high (low) unemployment tend to exhibit low...

We model a labor market where employed workers search on the job and firms direct workers' search using wage offers and employment probabilities. Applicants observe all offers and face a trade-off between wage and employment probability. There is wage dispersion among workers, even though all...

We study a large market with directed search and signaling. Each seller chooses an investment that determines the quality of the good which is the seller's private information. A seller also chooses the price of the good and the number of selling sites. After observing sellers' choices of prices...

We study a market where each seller chooses the quality and price of goods and the number of selling sites. Observing sellersʼ choices of prices and sites, but not quality, buyers choose which site to visit. A sellerʼs choices of prices can direct buyersʼ search and signal quality. A unique...