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| Author: | Garibaldi, P. |
| Title: | Job flow dynamics and firing restrictions |
| Journal: | European Economic Review
1998 : FEB, VOL. 42:2, p. 245-275 |
| Index terms: | UNEMPLOYMENT MODELS JOB SECURITY COSTS EUROPE USA |
| Language: | eng |
| Abstract: | The paper proposes and solves a stochastic search model with endogenous job separation and shows that the amplitude and time variation of job reallocation depend crucially on the arrival rate of exogenous firing permissions. The tighter the firing restrictions, the less volatile is job destruction and the higher the correlation btw. job reallocation and net employment changes. In addition, as firing restrictions increase, the average level of job reallocation falls while equilibrium unemployment is appr. constant. A parameterization of the model can rationalize cross-country differences in the cyclical behaviour of job destruction and job creation. |
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