A large number of establishments in the garment industries of the world are situated in the southeastern part of Asia where labor is plentiful and cheap. Recent reports and observational studies suggest that employees in this industry often work under difficult conditions that are unacceptable in industrialized countries. This paper reports the results of an ergonomic study in an export garment...

What Do Labor Market Institutions Do? The past couple of decades have seen a huge increase in research on various labor market institutions. This paper offers a brief overview and discussion of research on the labor market impacts of minimum wages (MW), unemployment insurance (UI), and employment protection legislation (EPL). It is argued that research on UI is largely a success story, involvin...

This study investigates the effects of employment protection on wages. The implementation of employment protection legislation increases employers’ firing costs and reduces labor turnover, and thus results in lower wages. Our empirical results show that the implementation of Taiwan’s Labor Standards Law leads to a reduction in wages, the effects of which varies with the stringency of the law’s ...

The Relevance of Post-Match LTC: Why Has the Spanish Labor Market Become as Volatile as the US One? We present a Search and Matching model with heterogeneous workers (entrants and incumbents) that replicates the stylized facts characterizing the US and the Spanish labor markets. Under this benchmark, we find the Post-Match Labor Turnover Costs (PMLTC) to be the centerpiece to explain why the Sp...

A simple model of discretionary worker investment in human capital is developed in which worker productivity is affected by a firm-specific match and employers bid strategically for workers. The labor market returns a share of specific capital productivity to workers without Nash bargaining power and without recourse to long-term contracts, because efficient turnover transforms a worker’s forme...

We examine a model that blends the neoclassical theory of investment with an intertemporal efficiency wage model with turnover costs. Investment decisions in capital are associated with the allocation of labor and the determination of efficiency wages. The model relates Tobin’s q to efficiency wages and, in particular, to the Solow condition. It provides a general framework to analyze firm’s in...

Macroeconomic Volatilities and the Labor Market: First Results from the Euro Experiment This paper analyzes the effects of different labor market institutions on inflation and output volatility. The eurozone offers an unprecedented experiment for this exercise: since 1999, no national monetary policies have been implemented that could account for volatility differences across member states, but...

Employment Protection, Product Market Regulation and Firm Selection This paper analyzes the effect of labor and product market regulation in a dynamic stochastic equilibrium with search frictions. Modeling multiple-worker firms allows us to distinguish between the exit-and-entry (extensive) margin, and the hiring-and-firing (intensive) margin. We characterize analytically how both margins depen...