Marcelo Veracierto

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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)
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)
We construct a general equilibrium model to evaluate the quantitative e¤ects of severance payments in the presence of contracting and reallocational 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)
Evaluating Labor Market Reforms: A General Equilibrium Approach Job security provisions are commonly invoked to explain the high and persistent European unemployment rates. This belief has led several countries to reform their labor markets and liberalize the use of fixed-term contracts. Despite how common such contracts have become after deregulation,(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)
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 result. When economies trade, labor market policies in one country spill over to other countries through their effect on the terms of trade. A key finding in the(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)
Option value arises in environments where an investment needs to be made under uncertainty. The decision to invest in postsecondary education is a perfect example. Students, as they learn about the uncertain educational outcomes, can drop out or transfer up to harder and more rewarding schools or even down to easier and less rewarding institutions, carrying(More)
The original Mortensen-Pissarides model possesses two elements that are absent from the commonly used simpli ed version: the job destruction margin and training costs. I nd that these two elements enable a model driven by a single aggregate shock to simultaneously explain most movements involving unemployment, vacancies, job destruction, job creation, the(More)