Marcelo Veracierto

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In this paper I evaluate to what extent a real business cycle (RBC) model that incorporates search and leisure decisions can simultaneously account for the observed behavior of employment, unemployment and out-of-the-labor-force. This contrasts with the previous RBC literature, which analyzed employment or hours fluctuations either by lumping together(More)
This paper extends Hopenhayn and Rogerson's analysis of firing taxes by introducing a flexible form of capital and considering transitionary dynamics. The paper finds that capital is not important for understanding the long run and welfare effects of firing taxes. However, capital is crucial for determining the short run consequences of eliminating this(More)
Job polarization refers to the recent shrinking concentration of employment in occupations in the middle of the skill distribution. Jobless recoveries refers to the slow rebound in aggregate employment following recent recessions, despite recoveries in aggregate output. We show how these two phenomena are related. First, essentially all employment loss in(More)
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This paper considers a real business cycle model with establishment level dynamics and uses it to analyze the effects of firing taxes. It finds that the firing taxes have significant consequences on business cycle fluctuations. The largest effects are on aggregate employment, which becomess less variable and more persistent. While the business cycle effects(More)
We construct a general equilibrium model to evaluate the quantitative e¤ects of severance payments in the presence of contracting and realloca-tional frictions. Key elements of the model are: 1) establishment level dynamics, 3) imperfect insurance markets, and 4) variable search decisions. Contrary to previous studies that analyzed severance payments in(More)
This paper develops a Walrasian equilibrium theory of establishment level dynamics and matching frictions and uses it to evaluate the effects of congestion externalities in the matching process and determine the government interventions that are needed to implement a Pareto optimal allocation. The optimal policy, which involves a tax on the creation of(More)
We develop a theoretical model of firm dynamics and unemployment and characterize equilibria with tenure dependent separation taxes. The model is a version of the Lucas and Prescott island model with undirected search. Two equivalent decentralizations are considered: one with spot labor markets and one with long-term employment relations. We model "(More)
† The views expressed here are those of the authors and not necessarily those of the Federal Reserve Bank of Philadelphia or the Federal Reserve System. Abstract In a closed economy general equilibrium model, Hopenhayn and Rogerson (1993) find large welfare gains to removing firing restrictions. We explore the extent to which international trade alters this(More)