Labor and product market regulations affect the unemployment rate of a country without doubt. Econometricians, however, have yet to establish an unequivocal significance of this impact. Model mis-specification, one of the main underlying problems, is overcome by adopting a Bayesian Model Averaging approach. I apply this method to a panel data set that covers 17 OECD countries for the time perio...

Standard economic analysis holds that labor market rigidities are harmful for job creation and typically increase unemployment. But many orthodox reforms of the labor market have proved di±cult to implement because of political opposition. For these reasons it is important to explain why we observe such regulations. In this paper I outline a theory of how they may arise and why they ̄t together...

This paper studies the contribution of in‡ow and out‡ow rates to the unemployment dynamics in the long-run. I …nd that in the U.S., both in‡ow and out‡ow rates contribute signi…cantly to variation in the long-run trend of the unemployment rate. In‡ow and out‡ow rates account for roughly similar proportions of overall unemployment variability in the long-run. Keywords: Unemployment dynamics; Job...

This paper proposes a generalized WS/PS model studying the impact of public spending on employment, in the presence of imperfect competition in labour and product markets. Public spending is shown to a¤ect …rms pro…t margins and …rms labour demand schedules. The model highlights a new channel by which …scal policy can improve employment. By reducing …rms’mark-up, public spending helps counterin...

In this paper we study the cyclical behavior of job and worker flows. Wefindfor the Netherlands that employment and unemployment flows are large, relative to the stocks, that both the sum ofemployment in and outflow and the sum of job creation and destruction (je and jd) move countercyclical. Other issues that we examined include the importance ofaggregate vs. sectoral shocks, the persistence o...

We consider a dynamic macroeconomic model with households that regard relative affluence as social status. The measure of relative affluence can be the ratio to, or the difference from, the social average. The two specifications lead to quite different results: with the ratio specification full employment is necessarily realized, whereas with the difference specification persistent shortages of...

This paper develops an equilibrium search model to explain gender asymmetry in occupational distribution. Workers’ utility depends on salary and working hours, and women have a greater aversion to market hours than men. Simulations indicate that women crowd into shorter-hour, lower-paying jobs than men. If employers discriminate against women, offers are tailored more toward men’s preferences; ...

We consider a Rothschild-Stiglitz-Spence labour market model and employ a centralised mechanism to coordinate the efficient matching of workers to firms. This mechanism can be thought of as operated by a recruitment agency, an employment office or head hunter. In a centralised descending-bid, multi-item procurement auction, workers submit wage-bids for each job and are assigned stable jobs as e...

We show that equilibrium involuntary unemployment emerges in a multi– stage game model where all market power resides with firms, on both the labour and the output market. Firms decide wages, employment, output and prices, and under constant returns there exists a continuum of subgame perfect Nash equilibria involving unemployment and positive profits. A firm does not undercut the equilibrium w...

Why Are European Countries Diverging in Their Unemployment Experience? During the nineties, unemployment has fallen in a number of European countries while it has remained high in others. The paper discusses potential causes for that evolution in light of recent economic research, emphasizing obstacles to reform due to political constraints, the prevalence of ideology, and agency issues within ...