CAP, Aarhus University

CAP, Cycles, Adjustment, and Policy' merges macro and labour economics and carries out research projects in the evolution of unemployment and the wage distribution through the business cycle, and the mechanisms behind, that will allow an analysis that can support policy making.

Recent experience shows that existing models have not been able to explain the functioning of the markets. Models for cycles have tended to ignore distributional aspects, and models of distribution have tended to be of he steady state variety, ignoring cycles. CAP will develop equilibrium models of unemployment and distribution over the cycle and use the unique detailed Danish matched employer-employee data to estimate the models structurally so that research based policy recommendations may be derived.