How Do Policies Affect the Exit Rate out of Unemployment? Disentangling Job Creation from Labour Market Frictions
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- handle: 10670/1.n1ezrz
- hal: hal-03460433
- doi: 10.1111/labr.12029
- SCIENCESPO: 2441/6krnfp4alc80oa55v0i3jrhl18
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Mots-clés
Labour market policies Unemployment outflow rate E - Macroeconomics and Monetary Economics/E.E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy/E.E2.E24 - Employment • Unemployment • Wages • Intergenerational Income Distribution • Aggregate Human Capital • Aggregate Labor Productivity J - Labor and Demographic Economics/J.J0 - General/J.J0.J08 - Labor Economics Policies J - Labor and Demographic Economics/J.J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers/J.J6.J63 - Turnover • Vacancies • Layoffs J - Labor and Demographic Economics/J.J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers/J.J6.J64 - Unemployment: Models, Duration, Incidence, and Job Search J - Labor and Demographic Economics/J.J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers/J.J6.J65 - Unemployment Insurance • Severance Pay • Plant Closings J - Labor and Demographic Economics/J.J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers/J.J6.J68 - Public PolicySujets proches
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Fabrice Murtin et al., « How Do Policies Affect the Exit Rate out of Unemployment? Disentangling Job Creation from Labour Market Frictions », Archive ouverte de Sciences Po (SPIRE), ID : 10.1111/labr.12029
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Résumé
This paper assesses the effects of labour market policies on the unemployment outflow rate while disentangling two channels, namely labour market tightness and employer–employee matching efficiency. Using a sample of 11 OECD countries over the period 1985–2007, we treat the endogeneity of market tightness with business cycle shocks and the tax wedge as instruments. We find that the replacement rate of unemployment benefits, Active Labour Market Policies as well as the tax wedge in countries with poorly representative unions, have a significant, robust, and large impact on market tightness. Employment protection has a negative but small impact on matching efficiency. Overall, policy effects appear to be mostly channeled through market tightness and job creation.