Labor market dynamics in stochastic timeless general equilibrium models.

Summary The purpose of this thesis is twofold: to propose a theory that can explain the dynamics of the labor market, and then to derive some policy recommendations from this theory. To this end, we identify four stylized facts as characteristic of fluctuations in employment, hours worked and the real wage. These facts are assumed to be representative of labor market dynamics. The first two parts of the thesis, each consisting of two chapters, are devoted to the positive study of the functioning of the labor market. Chapter 1 assesses the ability of a canonical Walrasian model to replicate the stylized facts identified. The quantitative results suggest that the representation of labor market equilibrium as the intersection of competitive supply and demand does not explain the dynamics of the labor market. Chapter 2, on the other hand, shows that the introduction of the matching hypothesis between unemployed persons and job vacancies is sufficient to understand the dynamics of employment. Chapter 3 compares different modes of non-competitive wage setting, individual bargaining and the efficiency wage, and concludes that in order to reproduce real wage fluctuations, the bargaining hypothesis must be retained, while proposing theoretical foundations for the rigidity of households' external opportunities. Chapter 4 thus shows that the existence of a costly transition for households through unemployment satisfies this criterion and allows the decentralized wage bargaining matching model to account for the four stylized facts representative of labor market dynamics. The final, normative part of the thesis also consists of two chapters. Chapter 5 shows that there is indeed a place for state intervention to simultaneously reduce unemployment and increase household welfare. Two competing employment subsidy policies are then considered in chapter 6: we show that the payment of hiring subsidies to firms is preferable to the payment of an employment allowance to workers.