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Aggregate Growth and the Efficiency of Labour Reallocation

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  • Simon Burgess
  • Dan Mawson

Abstract

We consider the potential importance of labour market efficiency for aggregate growth. The idea is that efficient labour markets move workers more quickly from low to high productivity sites, thereby raising aggregate productivity growth. We define a measure of labour market efficiency as a structural parameter from a matching function. Using labour market data on 15 OECD countries, we estimate this and show that it has a significant effect on growth. The results are robust to a number of different estimation techniques. The quantitative impact of market efficiency is not trivial.

Suggested Citation

  • Simon Burgess & Dan Mawson, 2003. "Aggregate Growth and the Efficiency of Labour Reallocation," CEP Discussion Papers dp0580, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:cepdps:dp0580
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    Cited by:

    1. Philip, Jung & Moritz, Kuhn, 2011. "The Era of the U.S.-Europe Labor Market Divide: What can we learn?," MPRA Paper 32322, University Library of Munich, Germany.

    More about this item

    Keywords

    growth; labour market efficiency; labour market institutions;

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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