Job turnover, unemployment and labor market institutions

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. Louvain-la-neuveAbstract 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.

Opening Clauses in Collective Bargaining Agreements: More Flexibility to Save Jobs?

“…Also referred to as hardship or opt-out clauses (Gürtzgen 2009) in the following we will continue to use the term opening clauses.2 See, for example,Joseph et al (2004) for wage rigidities;Pissarides (2000) for unemployment benefits and labour taxes;Addison and Teixeira (2003) for employment protection;Kugler and Pica (2008) for interactions between those. With respect to Germany, recent studies analyse whether works councils affect job flows; seeAddison and Teixeira (2006) orJirjahn (2008).3Wooden and Hawke (2000) analyse this for Australia;Long (1993) andWalsworth (2010) for Canada;Addison and Belfield (2004),Blanchflower et al (1991),Bryson (2004) andMachin and Wadhwani (1991) forBritain; Bronars et al (1994) andLeonhard (1992) for the United States.…”