This paper constructs an overlapping-generations model in which the steady-state equilibrium is characterized by the existence of search unemployment. This dynamic general equilibrium model captures the possible existence of search unemployment in the long run despite the absence of exogenous shocks. Furthermore, it allows for the wage offers' distribution to be determined endogenously. The effect of partial revelation of information on the existence of search unemployment in the long run is examined. It is shown that search unemployment may be eliminated in the long run despite the persistence of the state of imperfect information.
- Stagnation (Economics)