| Author: | Yashiv, E. |
| Title: | Macroeconomic policy lessons of labor market frictions |
| Journal: | European Economic Review
2004 : APR, VOL. 48:2, p. 259-284 |
| Index terms: | Policy Labour markets Unemployment |
| Language: | eng |
| Abstract: | This article examines what kind of effects macroeconomic policy has on the labour market in the presence of frictions. The policy effects are simulated with an empirically grounded model. The results show that policy may be useful in over-riding frictions but it can also have adverse outcomes. Measures reducing unemployment also reduce its persistence and increase the volatility of vacancies. Whereas employment subsidies or wage tax reductions are not very effective tools, hiring subsidies and unemployment benefits have significant effects on labor market outcomes. |
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