Date of Award


Degree Type


Degree Name

Doctor of Philosophy


This thesis examines several issues surrounding the causes of aggregate unemployment that relate to both individual work, rest, and search activities, and inter-industry labor reallocation process. On the other hand, this thesis also explores how heterogenous agents (employed and unemployed) react to a given unemployment insurance program as well as its welfare consequences within a general equilibrium search model.;The research in the first chapter is motivated by the three key features of the employment process in the U.S. economy: (1) job creation is procyclical, (2) job destruction is countercyclical, and (3) job creation is less volatile than job destruction. These features are also found at the sectoral (goods vs services) level. The analysis seeks to explain movements in labor market aggregates as the outcome of the interaction of aggregate and sectoral shocks. This analysis is developed in a multi-sector dynamic competitive general equilibrium model with the following features: (i) each market sector is subject to both aggregate and sectoral disturbances, (ii) it takes time to reallocate labor across sectors, and (iii) labor is indivisible.;The model reproduces the cyclical pattern of job creation and reallocation displayed in the U.S. data relatively well. Workers flow between sectors as jobs are created and destroyed in response to both aggregate and sectoral- specific disturbances. The main finding is that sectoral disturbances are a quantitatively important determinant of aggregate unemployment.;The second chapter develops an economy in which agents differ in their levels of wealth and face different employment opportunities. Individual agents choose to work and search to maximize their lifetime expected utility. The aim here is to evaluate quantitatively a set of feasible fiscal policies and to discuss their welfare consequences both for the employed and the unemployed. The main finding is that UI can improve social welfare but the distortion created by the corresponding taxes might also cause the decline in social welfare.;Two contributions are made in this chapter. First, individual search activity is modeled in a very different way from that observed in the existing search literature. This model concentrates on the utility-maximization job search and the employment-unemployment experience of risk-averse agents within the context of a dynamic general equilibrium model. Second, when individual agents can only insure themselves by precautionary savings, taxes will directly discourage job search. These taxes also discourage job search indirectly by distorting the allocation of physical capital and lowering the expected return to job search.



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