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Job Turnover, Unemployment and Labor Market Institutions

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  • Gilles, Joseph

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

  • Olivier Pierrard

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

  • Henri R. Sneessens

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) - Belgique and Université Catholique de Lille - France and IZA, Bonn - Duitschland)

Abstract

This paper studies the role of labor market institutions on unemployment and on the cyclical properties of job flows. We construct an intertemporal general equilibrium model with search unemployment and endogenous job turnover, and examine the consequences of introducing an unemployment benefit, a firing cost and a downward wage rigidity. The simulations suggest that downward wage rigidities, rather than unemployment benefit or firing cost, may well play a dominant role in explaining both the high unemployment rate and the job flows dynamics of such an economy.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 2003013.

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Length: 27
Date of creation: 01 Sep 2003
Date of revision:
Handle: RePEc:ctl:louvir:2003013

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Keywords: Unemployment; Job flows dynamics; Institutions;

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  17. Olivier, Pierrard & Henri R., Sneessens, 2002. "Low-Skilled Unemployment, Biased Technological Shocks and Job Competition," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales), Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) 2003014, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), revised 03 May 2002.
  18. Andolfatto, David, 1996. "Business Cycles and Labor-Market Search," American Economic Review, American Economic Association, American Economic Association, vol. 86(1), pages 112-32, March.
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