This course presents a matching model of unemployment. It uses the model to study unemployment fluctuations; job rationing; efficient unemployment and unemployment gap; and labor market policies such as minimum wage, public employment, and unemployment insurance.
This paper explains why a wave of immigration reduces the employment rate of native workers, and why this reduction is larger in bad times. Yet, immigration improves native welfare when the labor market is inefficiently tight, because it helps firms to recruit.
This paper develops a sufficient-statistic formula for the unemployment gap. The formula depends on the elasticity of the Beveridge curve, cost of unemployment, and recruiting cost. In the United States the unemployment gap is countercyclical and often positive.
This paper proposes a matching model of the labor market with job rationing: unemployment does not disappear in the absence of matching frictions. In recessions, job rationing drives the rise of unemployment, whereas matching frictions contribute little to it.