Modeling the Displacement of Native Workers by Immigrants

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.

September 2023 · Pascal Michaillat

Optimal Public Expenditure with Inefficient Unemployment

This paper shows that when unemployment is inefficient, optimal public expenditure deviates from the Samuelson rule to reduce the unemployment gap. Optimal stimulus spending depends on the unemployment gap, unemployment multiplier, and an elasticity of substitution.

May 2019 · Pascal Michaillat, Emmanuel Saez

A Macroeconomic Approach to Optimal Unemployment Insurance: Applications

This paper explores how the optimal replacement rate of unemployment insurance varies over the business cycle in the United States. It finds that the optimal replacement rate is countercyclical, just like the actual replacement rate.

May 2018 · Camille Landais, Pascal Michaillat, Emmanuel Saez

A Theory of Countercyclical Government Multiplier

This paper develops a New Keynesian model in which the government multiplier doubles when the unemployment rate rises from 5% to 8%. The multiplier is so countercyclical because in bad times, on the labor market, job rationing dwarfs matching frictions.

January 2014 · Pascal Michaillat