There is more resistance to layoffs in continental Europe than in the U.S. At the same time, there is some evidence that employed European workers are more productive than their American counterparts. We reconcile these two facts by proposing that some institutions, such as Employment Protection...

Wage determination under asymmetric information generates ine¢ ciencies due to excess turnover. Severance pay and layo¤ taxes can improve e¢ ciency. We show that inefficient separations can even be fully removed with …xed separation taxes in the case where therelevant private information is...

We argue that the main difference between European and American labor markets is not so much in the unemployment rates, but maybe more importantly in the reduced flows into and out of unemployment, in Europe. Employment protection legislations (EPL) have been extensively studied in the...

Wage determination under asymmetric information generates inefficiencies due to excess turnover. Severance pay and layoff taxes can improve efficiency. We show that inefficient separations can even be fully removed with fixed separation taxes in the case where the relevant private information is...

There is more resistance to layoffs in continental Europe than in the U.S. At the same time, there is some evidence that employed European workers are more productive than their American counterparts. We reconcile these two facts by proposing that some institutions, such as Employment Protection...

There is more resistance to layoffs in continental Europe than in the U.S. At the same time, there is some evidence that employed European workers are more productive than their American counterparts. We reconcile these two facts by proposing that some institutions, such as Employment Protection...

Wage determination under asymmetric information generates ine¢ ciencies due to excess turnover. Severance pay and layo¤ taxes can improve e¢ ciency. We show that inefficient separations can even be fully removed with …xed separation taxes in the case where therelevant private information is...

We study the relation between international trade and the gains to reform labor markets by removing firing restrictions. We find that trade linkages imply substantially smaller benefits to reform than those calculated in the closed economy general equilibrium model of Hopenhayn and Rogerson...

A labor market model under search frictions is developed, where participants are heterogeneous in productivity and the decision of which type of agents to match with is endogenized. Two applications are studied. It is observed that countries with high (low) unemployment tend to exhibit low...

In a closed economy general equilibrium model, Hopenhayn and Rogerson (1993) find large welfare gains to removing firing restrictions. We explore the extent to which international trade alters this result. When economies trade, labor market policies in one country spill over to other countries...