Institutional Determinants of Worker Flows

Abstract

JT03286526 SUMMARYThere is little cross-country comparative evidence on the way labour market institutions shape gross job and worker flows, by and large because comparable data for many countries are scarce. By using a unique harmonised dataset on hirings and separations at the industry-level for a large majority of OECD countries, we fill this gap, by analysing the role of a number of labour and product market institutions in shaping cross-country differences in gross worker flows. In order to identify the effect of policies and institutions we consider an industry-level difference-in-difference approach. The basic premise of this approach is that the effect of a particular policy on gross job flows is greater in industries where the policy is more likely to constrain firm behaviour. We check, however, the robustness of our results using more standard cross-country/time-series estimates. The richness of the data available to us allows estimating the impact of the institutions also on the transitions from job to job, the transitions from job to nonemployment and the transitions from non-employment to jobs. We find that cross-country differences in job protection for open-ended contracts and unemployment benefits can explain a large share of crosscountry variation in gross worker flows. However, the effect of the former is essentially limited to job-tojob flows.

The Dynamics of Employment Growth

“…OECD SCIENCE, TECHNOLOGY AND INDUSTRY POLICY PAPERS Bassanini et al (2010) use a harmonised dataset on hirings and separations at the industry-level in OECD countries to analyse how labour-market institutions affect gross job and worker flows. The results suggests that cross-country differences in job protection for open-ended contracts and unemployment benefits can explain a large share of cross-country variation in gross worker flows, although the effect of the former is largely limited to job-to-job flows, as opposed to job-to-jobless or jobless-to-job transitions.…”

Labour share developments over the past two decades

“…The hiring rate is defined as the ratio of workers with less than one year of tenure to the average industry employment in t-1 and t. The separation rate is the difference between the hiring rate and rate of change in employment. Source: Bassanini and Garnero (2013 [33]).…”