Job Turnover, Unemployment and Labor Market Institutions

29 Pages Posted: 17 Aug 2003

See all articles by Gilles Joseph

Gilles Joseph

University of the Antilles and Guyane - Faculty of Law and Economics

Olivier Pierrard

Banque Centrale du Luxembourg; IRES, UCL

Henri R. Sneessens

Catholic University of Louvain (UCL) - Institut de Recherches Economiques et Sociales (IRES); IZA Institute of Labor Economics

Date Written: July 2003

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 model is able to reproduce the main cyclical properties of a typical European economy. It also suggests 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 cyclical properties of such an economy.

Keywords: unemployment, job flows dynamics, institutions

JEL Classification: E24, J38, J63, J65

Suggested Citation

Joseph, Gilles and pierrard, olivier and Sneessens, Henri, Job Turnover, Unemployment and Labor Market Institutions (July 2003). Available at SSRN: https://ssrn.com/abstract=434980 or http://dx.doi.org/10.2139/ssrn.434980

Gilles Joseph

University of the Antilles and Guyane - Faculty of Law and Economics ( email )

France

Olivier Pierrard (Contact Author)

Banque Centrale du Luxembourg ( email )

2, boulevard Royal
Luxembourg, L-2983
Luxembourg

IRES, UCL ( email )

3, Place Montesquieu
1348 Louvain-la-Neuve
Belgium

Henri Sneessens

Catholic University of Louvain (UCL) - Institut de Recherches Economiques et Sociales (IRES) ( email )

3, Place Montesquieu
1348 Louvain-la-Neuve
Belgium
+ (32) 10 47 39 62 (Phone)
+ (32) 10 47 39 45 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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