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Enforcement of Employment Security Regulations, On-The-Job Search and Unemployment Duration

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  • Boeri, Tito

Abstract

Contrary to the popular wisdom, ‘sclerotic’ European labour markets are characterized by relatively large job turnover rates. A model is developed which – unlike standard theories of job matching with on-the-job search – can account for the coexistence of strict employment security regulations, significant job-to-job shifts and high long-term unemployment rates in these countries. This is because: i) employment security regulations can only be enforced by increasing the number of workers on ‘short-term jobs’; and ii) the latter compete for jobs with unemployed jobseekers. Evidence is presented, showing that job finding probabilities of the unemployed are decreasing in the incidence of temporary employment, in line with the predictions of the model.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1850.

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Date of creation: Mar 1998
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Handle: RePEc:cpr:ceprdp:1850

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Keywords: employment security; Job-to-job shifts; Labour Turnover;

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References

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  1. Hall, Robert E, 1982. "The Importance of Lifetime Jobs in the U.S. Economy," American Economic Review, American Economic Association, vol. 72(4), pages 716-24, September.
  2. Boeri, Tito, 1996. "Is Job Turnover Countercyclical?," Journal of Labor Economics, University of Chicago Press, vol. 14(4), pages 603-25, October.
  3. Jovanovic, Boyan, 1984. "Matching, Turnover, and Unemployment," Journal of Political Economy, University of Chicago Press, vol. 92(1), pages 108-22, February.
  4. Bertola, Giuseppe, 1990. "Job security, employment and wages," European Economic Review, Elsevier, vol. 34(4), pages 851-879, June.
  5. Blanchard, J.O., 1989. "The Aggregate Matching Function," Working papers 538, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. Burda, Michael C & Wyplosz, Charles, 1993. "Gross Worker and Job Flows in Europe," CEPR Discussion Papers 868, C.E.P.R. Discussion Papers.
  7. Christopher A. Pissarides, 1992. "Search Unemployment with on-the-job Search," CEP Discussion Papers dp0074, Centre for Economic Performance, LSE.
  8. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-90, October.
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