The article explores how labor market rules affect economic ups and downs. By creating a model with job search challenges and a US unemployment insurance system, the researchers show that layoff taxes can impact job stability. Their model reflects real-world job market trends, like the relationship between job openings and unemployment rates. Simulations reveal that layoff taxes can reduce job losses during tough times and improve the balance between creating and losing jobs. This study sheds light on how labor market policies can shape the economy's performance.