Assessing Job Flows Across Countries: The Role of Industry, Firm Size and Regulations
This paper analyzes job flows in a sample of 16 industrial and emerging economies over the past decade, exploiting a harmonized firm-level dataset. It shows that industry and firm size effects (and especially firm size) account for a large fraction in the overall variability in job flows. However, large residual differences remain in the job flow patterns across countries. To account for the latter, the paper explores the role of differences in employment protection legislation across countries. Using a difference-in-difference approach that minimizes possible endogeneity and omitted variable problems, our findings show that hiring and firing costs tend to curb job flows, particularly in those industries and firm size classes that require more frequent labor adjustment.
We are grateful to Robin Burgess, Laurence Kahn, Adriana Kugler, Julian Messina, Carmen Pages, John Shea, John Sutton, Luis Serven, James Tybout and the participants at the World Bank Conference on the 'Microeconomic of Growth' (Washington, D.C., May 18-19, 2006), at the Annual Conference of the European Association of Labour Economists (EALE, Prague, September 21-23, 2006), at the World Bank and IZA 2nd Conference on 'Employment and Development' (Bonn, June 8-9, 2007) and at the 2008 Annual Meetings of the American Economic Association (New Orleans, 4-6 January, 2008) for their insightful comments. The views expressed in this paper are our own and do not necessarily represent those of the institutions of affiliation. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.