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Firing Costs and Labor Market Fluctuations: A Cross-Country Analysis

Author

Listed:
  • Gonzalo Llosa

    (University of California Los Angeles)

  • Lee Ohanian

    (University of California Los Angeles)

  • Andrea Raffo

    (Federal Reserve Board)

  • Richard Rogerson

    (Princeton University)

Abstract

We document large differences across OECD countries in fluctuations of the intensive and extensive margin of labor supply over the business cycle. Countries with larger fluctuations in employment relative to hours per worker tend to display larger fluctuations in total hours worked. These facts appear to be related to policies that impede the dismissal of workers. We then present a quantitative framework that features both margins of labor supply as well as costs to the adjustment of employment. Cross-country differences in dismissal costs can account for a large fraction of the patterns observed in the data.

Suggested Citation

  • Gonzalo Llosa & Lee Ohanian & Andrea Raffo & Richard Rogerson, 2014. "Firing Costs and Labor Market Fluctuations: A Cross-Country Analysis," 2014 Meeting Papers 533, Society for Economic Dynamics.
    • Handle: RePEc:red:sed014:533
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    References listed on IDEAS

    as
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Firing Costs and Labor Market Fluctuations: A Cross-Country Analysis
      by Christian Zimmermann in NEP-DGE blog on 2014-12-08 20:34:05

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    Cited by:

    1. Kudoh, Noritaka & Miyamoto, Hiroaki & Sasaki, Masaru, 2015. "Employment and Hours over the Business Cycle in a Model with Search Frictions," IZA Discussion Papers 8946, Institute for the Study of Labor (IZA).
    2. Bottasso, Anna & Conti, Maurizio & Sulis, Giovanni, 2017. "Firm dynamics and employment protection: Evidence from sectoral data," Labour Economics, Elsevier, vol. 48(C), pages 35-53.
    3. Daniel Borowczyk-Martins & Etienne Lalé, 2017. "Employment Adjustment and Part-time Work: Lessons from the United States and the United Kingdom," CIRANO Working Papers 2017s-27, CIRANO.

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