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Federal Reserve Bank of Cleveland
Economic Commentary
Understanding unemployment
Guillaume Rocheteau
Abstract

Modern economists have built models of the labor market, which isolate the market’s key drivers and describe the way these interact to produce particular levels of unemployment. One of the most popular models used by macroeconomists today is the search-matching model of equilibrium unemployment. We explain this model, and show how it can be applied to understand the way various policies, such as unemployment benefits, taxes, or technological changes, can affect the unemployment rate.


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Guillaume Rocheteau, "Understanding unemployment" , Federal Reserve Bank of Cleveland, Economic Commentary, issue Oct, 2006.
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Keywords: Unemployment ; Labor market
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