Institutions and Labour Reallocation

Giuseppe Bertola and Richard Rogerson

No 1519, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Despite stringent dismissal restrictions in most European countries, rates of job creation and destruction are remarkably similar across European and North American labour markets. This paper shows that relative-wage compression is conducive to higher employer-initiated job turnover, and argues that wage-setting institutions and job security provisions differ across countries in ways that are both consistent with rough uniformity of job turnover statistics and readily explained by intuitive theoretical considerations. When viewed as a component of the mix of institutional differences in Europe and North America, European dismissal restrictions are essential to a proper interpretation of both similar patterns in job turnover, and marked differences in unemployment flows.

Keywords: Firing Costs; Gross Job Turnover; Wage Compression (search for similar items in EconPapers)
JEL-codes: J31 J63 (search for similar items in EconPapers)
Date: 1996-11
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Citations: View citations in EconPapers (24)

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Related works:
Journal Article: Institutions and labor reallocation (1997)
Working Paper: Institutions and Labor Reallocation (1996)
Working Paper: Institutions and Labor Reallocation (1996)
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