Job Flow Dynamics and Firing Restrictions: Evidence from Europe

Julian Messina and Giovanna Vallanti

No 2045, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We exploit homogeneous firm level data of manufacturing and non-manufacturing sectors to study the impact of firing restrictions on job flow dynamics across 14 European countries. We find that more stringent firing laws dampen the response of job destruction to the cycle, thus making job turnover less counter-cyclical. Moreover, the impact of firing costs on job creation and job destruction varies across sectors, depending on sector-specific trend growth. Our findings clearly suggest that such costs are more important in contracting than in growing sectors.

Keywords: gross job flows; Europe; business cycle; firing costs (search for similar items in EconPapers)
JEL-codes: J23 J63 J68 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2006-03
New Economics Papers: this item is included in nep-eec and nep-reg
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Citations: View citations in EconPapers (11)

Published - revised version published in: Economic Journal, 2007, 117 (521), F279 - F301

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Related works:
Journal Article: Job Flow Dynamics and Firing Restrictions: Evidence from Europe (2007)
Working Paper: Job flow dynamics and firing restrictions: evidence from Europe (2006)
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