Ricerc@Sapienza

This paper analyzes the role played by five labor policy instruments (firing tax, hiring subsidies, taxation, unemployment benefits and tax structure) in a matching model with endogenous job destruction, when search externalities are not internalized and the market solution is inefficient. Since the theoretical model does not show univocal effects on equilibrium unemployment of some policy tools (such as hiring subsidies and firing tax), we propose a calibration and a numerical simulation of the model, in order to verify their real impact on unemployment and labor market structure.