Enforcement of Employment Security Regulations, On-The-Job Search and Unemployment Duration

Tito Boeri

No 1850, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Contrary to the popular wisdom, ‘sclerotic’ European labour markets are characterized by relatively large job turnover rates. A model is developed which – unlike standard theories of job matching with on-the-job search – can account for the coexistence of strict employment security regulations, significant job-to-job shifts and high long-term unemployment rates in these countries. This is because: i) employment security regulations can only be enforced by increasing the number of workers on ‘short-term jobs’; and ii) the latter compete for jobs with unemployed jobseekers. Evidence is presented, showing that job finding probabilities of the unemployed are decreasing in the incidence of temporary employment, in line with the predictions of the model.

Keywords: employment security; Job-to-job shifts; Labour Turnover (search for similar items in EconPapers)
JEL-codes: J10 J64 (search for similar items in EconPapers)
Date: 1998-03
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Journal Article: Enforcement of employment security regulations, on-the-job search and unemployment duration (1999)
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