Labor market frictions, unemployment and economic policy

This thesis arose from curiosity about how labor market fortunes are determined in a world whereby decisions are taken in the presence of various labor market institutions, how well the computational general equilibrium models can match the observed labor market outcomes, and how has taken place the evolution of methodology employed by the studies of macro- and labor economics. This work is a modest attempt to better understand search and matching, their prehistory, as well as their ability to explain labor market phenomena and policy applications. As a result, this dissertation looks at the search and matching framework from various angles: historical, positive and normative. After studying the emergence of search and matching, we employ a number of computational general equilibrium models with embodied labor market frictions to test how they fare in reproducing the actual labor market outcomes and what policies could possibly be recommended on their basis. We focus predominantly on unemployment and a selection of institutions --- labor taxes, minimum wages and social security systems --- mainly in the European economies. One of the essays investigates whether a one-sided search model with human capital accumulation and mirco-level turbulence could be consistent with the Great Moderation. The following one studies the effect of tax cuts in the presence of minimum wages, job competition and on-the-job search. Finally, we look at the ability of a matching model placed in the OLG framework to explain the joint evolution of unemployment and participation in the last decades.(ECON 3) -- UCL, 201