The article explores how labor market rules affect economic ups and downs. By using a model with job search challenges and an unemployment insurance system in the US, the researchers show that layoff taxes can make it harder for businesses to adjust to changes. Their model matches real-world data by showing a link between job openings and unemployment rates. Simulations reveal that layoff taxes can reduce the impact of job losses during tough times and strengthen the connection between creating and losing jobs. Overall, the study suggests that these taxes play a crucial role in shaping the US job market.