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Life-Cycle Worker Flows and Cross-country Differences in Aggregate Employment

Author

Listed:
  • Jonathan Créchet

    (Department of Economics, University of Ottawa, Ottawa, ON)

  • Étienne Lalé

    (Department of Economics, York University)

  • Linas Tarasonis

    (CEFER, Bank of Lithuania)

Abstract

We propose new data moments to measure the role of life-cycle worker flows between employment, unemployment and out of the labor force in shaping cross-country differences in aggregate employment. We then show that a suitably extended version of the Diamond-Mortensen-Pissarides model can capture well these data moments. Two features of the model are crucial for this result: heterogeneity in match quality and endogenous search intensity. We examine the implications of this model for the sources of employment dispersion across Europe's largest countries, assessing the contribution of factors related to (i) the production technology, (ii) search, and (iii) policies. The sources of cross-country employment dispersion differ substantially across ages. Technology factors account for most of the employment variance of youths and prime-age workers, whereas search and policies are the main drivers of employment differences for older individuals.

Suggested Citation

  • Jonathan Créchet & Étienne Lalé & Linas Tarasonis, 2023. "Life-Cycle Worker Flows and Cross-country Differences in Aggregate Employment," Working Papers 2306E, University of Ottawa, Department of Economics.
    • Handle: RePEc:ott:wpaper:2306e
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    File URL: http://hdl.handle.net/10393/45718
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    References listed on IDEAS

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    More about this item

    Keywords

    Employment; Unemployment; Labor Force Participation; Life cycle; Worker Flows; Labor Market Institutions;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition

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