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Employment and Fear of Unemployment: A Transatlantic Comparison

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  • Alexandre BACLET
  • Daniel COHEN
  • Cyril NOUVEAU

Abstract

The paper investigates the welfare differential between employed and non-employed workers in the US and in France. Using a simplified version of the Mortensen-Pissarides matching model, we explore the role of hiring and firing costs in understanding how the welfare differential and the labor market flows differ across the Atlantic. We find that the welfare differential between employed and unemployed workers across the two countries fall apart from each other over the period, but from relatively similar initial values. At the end of the exercice we argue that hirings and firings frictions in both countries are not as far apart as usually assumed. Fear of unemployment appears instead to drive the difference between the two countries. Both the higher trap of inactivity and lower unemployment benefits explain the higher US hiring rate

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File URL: http://www.jstor.org/stable/27917402
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Bibliographic Info

Article provided by ENSAE in its journal Annals of Economics and Statistics.

Volume (Year): (2009)
Issue (Month): 95-96 ()
Pages: 25-41

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Handle: RePEc:adr:anecst:y:2009:i:95-96:p:03

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