Consider a threeperiod version of the onesided search model with two types of jobs. Let at denote the unemployment rate at time t = U, 1, 2. The remaining 1 at of labour force participants are employed, either at a lowwage job or a highwage job at time t : 0,1,2. The unemployment benefit is denoted b, and the two wage levels are is; and in}, satisfying 6 U is the discount rate. In terms of notation, let V,\