Cross country differences in job reallocation: The role of industry, firm size and regulations

John Haltiwanger, Stefano Scarpetta and Helena Schweiger

Labour Economics, 2014, vol. 26, issue C, 11-25

Abstract: Somewhat surprisingly, cross-country empirical evidence (at least in the cross section) does not seem to support the predictions of standard models that economies with stricter regulations on hiring and firing should have a lower pace of job reallocation. One problem in exploring these issues empirically has been the difficulty of comparing countries on the basis of harmonized measures of job reallocation. A related problem is that there may be unobserved measurement errors or other factors accounting for differences in job reallocation across countries. This paper overcomes these challenges by using harmonized measures of job creation and destruction in a sample of 16 industrial and emerging economies, exploiting the country, industry and firm size dimensions. The analysis of variance in the paper shows that firm size effects are a dominant factor in accounting for the variation in the pace of job reallocation across country, industry and size cells. However, even after controlling for industry and size effects there remain significant differences in job flows across countries that could reflect differences in labor market regulations. We use the harmonized data to explore this hypothesis with a difference-in-difference approach. We find strong and robust evidence that stringent hiring and firing regulations tend to reduce the pace of job reallocation.

Keywords: Gross job flows; Firm dynamics; Firm size; Product and labor market regulations (search for similar items in EconPapers)
JEL-codes: J23 J53 K31 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (107)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927537113001097
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:26:y:2014:i:c:p:11-25

DOI: 10.1016/j.labeco.2013.10.001

Access Statistics for this article

Labour Economics is currently edited by A. Ichino

More articles in Labour Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().