In the standard macroeconomic search and matching model of the labor market, there is a tight link between the quantitative effects of (i) aggregate productivity shocks on unemployment and (ii) unemployment benefits on unemployment. This tight link is at odds with the empirical literature. We...

This paper describes the practical implementation of hiring vouchers in Germany. According to our proposal, employers receive vouchers for hiring long-term unemployed, low-ability workers. Thereby labor costs are reduced for a limited period of time. The size of the vouchers increases with the...

This paper presents a theory explaining the labor market matching process through microeconomic incentives. There are heterogeneous variations in the characteristics of workers and jobs, and firms face adjustment costs in responding to these variations. Matches and separations are described...

What are the challenges that globalization makes on welfare states and how should welfare states respond? How should welfare states be designed to enable countries to reap the benefits of globalization? These are the main themes of Hans-Werner Sinn's book, Can Germany Be Saved? We view Germany...

This paper provides a theoretical and quantitative analysis of various types of wellknown employment subsidies. Two important questions are addressed: (i) How should employment subsidies be targeted? (ii) How large should the subsidies be? We consider measures involving targeting workers with...

This paper analyses theoretically and empirically how employment subsidies should be targeted. We contrast measures involving targeting workers with low incomes/abilities and targeting the unemployed under the criteria of "approximate welfare efficiency" (AWE). Thereby we can identify policies...

"This paper describes the practical implementation of hiring vouchers in Germany. According to our proposal, employers receive vouchers for hiring long-term unemployed, low-ability workers. Thereby labor costs are reduced for a limited period of time. The size of the vouchers increases with the...

This paper examines the labour market matching process by distinguishing its two component stages: the contact stage, in which job searchers make contact with employers and the selection stage, in which they decide whether to match. We construct a theoretical model explaining two-sided selection...

In jüngster Zeit wurde eine Vielzahl von Kombilohnvorschlägen zur Bekämpfung der Arbeitslosigkeit gemacht (vgl. z.B. Sinn et al. 2006; Sachverständigenrat 2006). Diese sollen Abhilfe bei der persistenten Langzeitarbeitslosigkeit und den hohen Arbeitslosenraten bei Niedrigqualifizierten schaffen....