Institutions and Labor Reallocation

30 Pages Posted: 15 Sep 2000 Last revised: 5 Dec 2022

See all articles by Giuseppe Bertola

Giuseppe Bertola

University of Turin - Department of Economics

Richard Rogerson

Princeton University - Princeton School of Public and International Affairs; Arizona State University (ASU) - Economics Department; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: November 1996

Abstract

Despite stringent dismissal restrictions in most European countries, rates of job creation and destruction are remarkably similar across European and North American labor markets. This paper shows that relative-wage compression is conducive to higher employer-initiated job turnover, and argues that wagesetting institutions and job-security provisions differ across countries in ways that are both consistent with rough uniformity of job turnover statistics and readily explained by intuitive theoretical considerations. When viewed as a component of the mix of institutional differences in Europe and North America, European dismissal restrictions are essential to a proper interpretation of both similar patterns in job turnover and marked differences in unemployment flows.

Suggested Citation

Bertola, Giuseppe and Rogerson, Richard, Institutions and Labor Reallocation (November 1996). NBER Working Paper No. w5828, Available at SSRN: https://ssrn.com/abstract=225615

Giuseppe Bertola (Contact Author)

University of Turin - Department of Economics ( email )

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Richard Rogerson

Princeton University - Princeton School of Public and International Affairs ( email )

Princeton University
Princeton, NJ 08544-1021
United States

Arizona State University (ASU) - Economics Department ( email )

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United States
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602-965-0748 (Fax)

National Bureau of Economic Research (NBER)

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