Job Turnover and Policy Evaluation: A General Equilibrium Analysis

Hopenhayn, Hugo A.; Rogerson, Richard

doi:10.1086/261909

“…5 Firing taxes depress employment in environments with employment lotteries (Hopenhayn and Rogerson, 1993), and in matching models if they increase workers' threat point in new matches. The latter is the case only if firms, counter-factually, incur the firing tax even if an encounter with an unemployed worker is not turned into an employment relationship, as in Millard and Mortensen (1997) (see Ljungqvist 2002 and reference therein for a comprehensive discussion).…”

Section: Saintmentioning

confidence: 99%

Job displacement risk and severance pay

Cozzi

¹

,

Fella

²

2016

Journal of Monetary Economics

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This paper is a quantitative, equilibrium study of the insurance role of severance pay when workers face displacement risk and markets are incomplete. A key feature of our model is that, in line with an established empirical literature, job displacement entails a persistent fall in earnings upon re-employment due to the loss of tenure. The model is solved numerically and calibrated to the US economy. In contrast to previous studies that have analyzed severance payments in the absence of persistent earning losses, we find that the welfare gains from the insurance against job displacement afforded by severance pay are sizable.Keywords: Severance Payments, Incomplete Markets, Welfare.JEL classification: E24, D52, D58, J65.$ We thank the editor, Urban Jermann, and an anonymous referee for helpful and constructive comments, as well as Gianluca Violante for his help on this project. We are also grateful to the George Alessandria, Rui Castro, Henry Farber, Dirk Krueger, Igor Livshits, Claudio Michelacci, Makoto Nakajima, Fabien Postel-Vinay, Víctor Ríos-Rull, Richard Rogerson, Andrew Scott and seminar participants at several conferences and institutions for useful comments and suggestions.

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“…Even if these arguments are accepted -and in this area modest reparameterization can yield very different net employment outcomes -there is also the point that employment adjustment costs slow down the reallocation of labor from old and declining 6 to new and dynamic sectors (Hopenhayn and Rogerson, 1993), or that they are in conflict with the need for greater flexibility in sectors producing new goods and services because of their more volatile demand. Nickell and Layard (1999, p. 3063) have countered that such effects may be offset by the turnover of workers.…”

Section: Theoretical Observationsmentioning

confidence: 99%

The economics of employment protection

Addison

¹

,

Teixeira

²

2003

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in The Economics of Employment ProtectionJohn T. Addison Paulino Teixeira The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent, nonprofit limited liability company (Gesellschaft mit beschränkter Haftung) supported by the Deutsche Post AG. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. The current research program deals with (1) mobility and flexibility of labor markets, (2) internationalization of labor markets and European integration, (3) the welfare state and labor markets, (4) labor markets in transition, (5) the future of work, (6) project evaluation and (7) general labor economics. D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. ABSTRACT The Economics of Employment ProtectionEmpirical investigation of the labor market consequences of employment protection has mushroomed since Lazear's (1990) pioneering study. Having sketched the theoretical background, we chart the course of the modern empirical literature. We focus mainly on dismissals protection, distinguishing between the themes of employment and unemployment development and labor market dynamics proper. Our discussion of employment and unemployment largely deals with the effect of employment protection on levels of these outcome indicators. We distinguish between overall and compositional effects (e.g., by demographic group and type of contract), between developing and industrialized nations, and identify some key control variables. Our discussion of labor market dynamics focuses on the speed of adjustment issue and on gross flows. It also formalizes the link between analyses of levels and changes in variables. At all times potential offsets to the adverse effects of employment protection receive consideration.

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“…Hopenhayn and Rogerson (1993) presented a general equilibrium model and suggested that increased firing tax increases both current and future labor cost and makes labor reallocations more rigid (see also Bentolila and Bertola 1990). In addition, Kugler and Saint-Paul (2004) emphasized that adverse selection of workers by firms makes the unemployment 4 Ohtake and Fujikawa (2002) and Ohtake (2004) first organized the statistical information regarding the doctrine of adjustment dismissal that has been established by courts.…”

Section: Theoretical Backgroundmentioning

confidence: 99%

The economic costs of court decisions concerning dismissals in Japan: Identification by judge transfers

Okudaira

¹

2018

International Review of Law and Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may THE ECONOMIC COSTS OF COURT DECISIONS CONCERNING DISMISSALS IN JAPAN: IDENTIFICATION BY JUDGE TRANSFERS Hiroko OkudairaThe 11 AbstractThe goal of this paper is to detect the degree to which court decisions control the stringency of employment protection and to investigate how such judicial discretion affects labor market performance. However, identification difficulty arises because court decisions are volatile against economic and social conditions. This paper overcomes the endogeneity problem by exploiting the triennial judge transfer system in Japan, or the exogenous allocation of judges to prefectures. A key finding is that the prefecture employment rate is reduced by approximately 1.4% if a prefecture receives more pro-worker judgments than pro-employer ones in a given year.Journal of Economic Literature Classification Numbers: J65, K31, K41

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Job Turnover and Policy Evaluation: A General Equilibrium Analysis

Cited by 973 publications

References 10 publications

Job displacement risk and severance pay

Job displacement risk and severance pay

The economics of employment protection

The economic costs of court decisions concerning dismissals in Japan: Identification by judge transfers

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