A model of the labour market under firing restrictions and endogenous quits is constructed. It is shown that in the spirit of Blanchard and Summers (1988), the model can generate multiple equilibria, with a low-quits/high-unemployment equilibrium coexisting with a high-quits/low-unemployment...

The transition from centrally planned to market economy involves a process of massive occupational change that has been largely neglected in the literature. This paper investigates this process using data from the 1995 Estonian Labour Force Survey. We find that between 35 and 50 percent of wage...

We analyze a general search model with on-the-job search and sorting of heterogeneous workers into heterogeneous jobs. This model yields a simple relationship between (i) the unemployment rate, (ii) the value of non-market time, and (iii) the max-mean wage differential. The latter measure of...

The paper analyses complementarities among a variety of labour market policies. It shows: (a) that a wide range of labour market institutions (e.g. unemployment benefits, job security legislation and payroll taxes) have complementary effects on unemployment; and thus (b) that policies aimed at...

This paper surveys the use of search and matching models in macroeconomics. It outlines the standard model, discusses its extensions, presents alternative formulations, considers the empirical evidence, and studies applications to macroeconomic questions such as business cycles, growth, and...

This Paper explores the influence of on-the-job training on the employment effect of firing costs. It shows that on-the-job training (generating firm specific skills) causes firing costs to have a contractionary influence on average employment (over the booms and recessions of the business cycle).

We study a search model where workers can apply to high and or low productivity firms. Firms that compete for the same candidate can increase their wage offers as often as they like. We show that if workers apply to two jobs, there is a unique symmetric equilibrium where workers mix between...

We present an empirical analysis of job reallocation and labour mobility using matched worker-firm data for the Netherlands to investigate how firms adjust their workforce over the cycle. Our data cover the period 1993-2002. We find that cyclical adjustments of the workforce occur mainly through...

In spite of ongoing dramatic changes in labor market structure, transitional economies display rather low worker flows across sectors and occupations. Such low mobility can be explained by low returns to job changes as well as by market segmentation in the allocation of job offers. We develop an...

The secular rise of European unemployment since the 1960s is hard to explain without reference to structural change. This is especially true in Germany, where industrial employment has declined by more than 30% and service sector employment has more than doubled over the past three decades....