Many workers believe that personal contacts are crucial for obtaining jobs in high-wage sectors. On the other hand, firms in high-wage sectors report using employee referrals because they help provide screening and monitoring of new employees. This paper develops a matching model that can...

In this paper, we present a matching model with adverse selection that explains why flows into and out of unemployment are much lower in Europe compared to North America, while employment-to-employment flows are similar in the two continents. In the model, firms use discretion in terms of whom...

Unemployment today is much higher in Europe than in the USA. This, however, was not always the case. From the 1960s until the first half of the 1970s, unemployment in continental Europe was lower than in the USA. This was the time of the vaunted “unemployment miracle” in Europe. These...

Unemployment Insurance (UI) benefits have a moral hazard effect and a liquidity effect, withboth generating increases in unemployment spells but the latter increasing wages due to theability to find better matches or better jobs. Previous papers, however, find mixed evidence onthe impact of UI...

Starting in the 1980s, the composition of immigrants to the U.S. shifted towards less-skilled workers partly due to the influx of Latin American immigrants in the past few decades. Around this time, real wages and employment of younger and less-educated U.S. workers fell. Some believe that...