The effects of the German unemployment compensation system on aggregate savings and the distribution of wealth are studied in a general equilibrium 60-period OLG model. The distribution of wealth is derived as an endogenous function of the parameters characterizing the unemployment compensation...

In Europe, high and persistent unemployment is usually attributed entirely to "labor market rigidity". The only remedy seriously discussed is deregulation of the labor market. This essay argues that there are two further sources of high unemployment in Europe: over-regulation and weakness of...