In this paper, we show how time-varying unemployment benefits can generate equilibrium wage dispersion in an economy in which identical firms post wages and homogenous workers search for acceptable offers. We allow for matching frictions and for free entry and exit of vacancies, and we model...

We extend the Diamond-Mortensen-Pissarides model of equilibrium unemployment to incorporate public-sector employment. We calibrate our model to Colombian data and analyze the effects of public-sector wage and employment policy on the unemployment rate, on the division of employment between the...

In this paper, we show how time-varying unemployment benefits can generate equilibrium wage dispersion in an economy in which identical firms post wages and homogeneous workers search for acceptable offers. We allow for matching frictions and for free entry and exit of vacancies, and we model...