Abstract
We read search theory’s equilibrium conditions for unemployment as an
iso-unemployment curve. A country’s position along the curve reveals its preferences over the destruction–duration mix. Using a panel of 20 OECD countries over 1985– 2009, we find that the employment protection legislation and collective bargaining coverage have opposing effects on the job destructions and unemployment durations, while the remaining key institutional factors affect one or another. Implementing the right reforms could reduce job destruction rates by about 0.05–1.3% points and unemployment rates by up to 4% points depending on the country considered.
iso-unemployment curve. A country’s position along the curve reveals its preferences over the destruction–duration mix. Using a panel of 20 OECD countries over 1985– 2009, we find that the employment protection legislation and collective bargaining coverage have opposing effects on the job destructions and unemployment durations, while the remaining key institutional factors affect one or another. Implementing the right reforms could reduce job destruction rates by about 0.05–1.3% points and unemployment rates by up to 4% points depending on the country considered.
| Original language | English |
|---|---|
| Pages (from-to) | 961-983 |
| Number of pages | 23 |
| Journal | Empirical Economics |
| Volume | 49 |
| Early online date | 11 Jan 2015 |
| DOIs | |
| Publication status | Published - Nov 2015 |
Keywords
- Labor market institutions
- Unemployment inflows
- Search model
- Unemployment duration
