Working Paper: CEPR ID: DP1850
Authors: Tito Boeri
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: job-to-job shifts; labour turnover; employment security
JEL Codes: J10; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| employment security regulations (J65) | prevalence of short-term jobs (J63) |
| prevalence of short-term jobs (J63) | job finding probabilities for the unemployed (J68) |
| employment security regulations (J65) | job finding probabilities for the unemployed (J68) |
| incidence of temporary employment (J63) | job finding probabilities for the unemployed (J68) |
| employment security regulations (J65) | duality of tenure distribution (D39) |
| employment security regulations (J65) | turnover in the unemployment pool (J60) |
| incidence of temporary employment (J63) | turnover in the unemployment pool (J60) |