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The purpose of this paper is to introduce productivity-dependent firing costs into an otherwise standard endogenous separations matching model. The authors suggest an alternative to the standard fix cost approach and account for empirical evidence emphasizing that firing costs vary across workers. The authors show that the model with firing costs outperformes the model without firing costs and replicates the empirical facts fairly well. Furthermore, the authors present cross-country evidence that countries with stricter employment protection have a weaker Beveridge curve relation and surprisingly more volatile job flow rates.

The authors begin the analysis at the intersection of labor and product markets. For this purpose, the authors derive a real business cycle model with search and matching frictions and endogenous separations. The authors enrich this set-up by introducing productivity-dependent firing costs.

The authors show that the model with firing costs outperformes the model without firing costs and replicates the empirical facts fairly well. Furthermore, the authors present cross-country evidence that countries with stricter employment protection have a weaker Beveridge curve relation and surprisingly more volatile job flow rates.

This paper introduces productivity-dependent firing costs into an otherwise standard endogenous separations matching model. The authors suggest an alternative to the standard fix cost approach and account for empirical evidence emphasizing that firing costs vary across workers. The authors show that the model with firing costs outperformes the model without firing costs and replicates the empirical facts fairly well. Furthermore, the authors present cross-country evidence that countries with stricter employment protection have a weaker Beveridge curve relation and surprisingly more volatile job flow rates.

The efficient functioning of the labour market is an important factor that affects long-term economic growth. The interaction of supply and demand on the labour market is influenced by institutions which change the motivations and behaviour of economic actors and, ultimately, the flexibility of the labour market. There is no consensus in the literature on the effect these institutions have on labour market outcomes. This chapter focuses on a set of selective labour market institutions (employment protection legislation, minimum wages, unemployment benefits, labour taxation, trade unions and active labour market policies), compares their relevance to other European Union (EU) countries and through the lens of the Beveridge curve it tries to evaluate their impact on effectiveness of the Czech labour market. The international comparison shows that most of the considered institutions/regulations do not reach such importance (except employment protection legislation) and that they have a significant negative effect on labour market outcomes. Even the model of the Beveridge curve does not indicate that the Czech labour market is characterised by rigidities that would impair the effectiveness of a matching process at the aggregate level.

This paper aims to explain the main empirical facts of housing markets, notably the trade-off between housing price and time-on-the-market, the positive correlation between housing price and the number of contracts traded during a given period (i.e. the trading volume) and the existence of price dispersion.

This theoretical paper makes use of a search and matching model. Search and matching, indeed, are two fundamental characteristics of the trading process in the housing market, and, thus, the search-and-matching models have become the new economic approach to the analysis of real estate markets.

This paper shows that a slightly modified version of the baseline search and matching model à la Mortensen-Pissarides can explain the main empirical facts of housing markets. There are two key mechanisms that allow to achieve this notable goal: a simple formalisation of the (reasonable) assumption that buyers today are potential sellers tomorrow (and vice versa); and the direct relationship between market tightness and house price, derived by the standard matching model and underestimated by the related literature.

The developed theoretical model only studies the equilibrium conditions. Indeed, it would be interesting to also study the disequilibrium in housing markets.

The explanation of the main empirical facts of housing markets is embodied in the same and relatively simple theoretical model.

In addition to the explanation of the main empirical facts of housing markets, the developed theoretical model can generate an upward sloping Beveridge curve in the housing market (the positive relation between home-seekers and vacant houses). Instead, according to a recent criticism in the related literature, a model à la Mortensen-Pissarides inherently generates a (empirically unrealistic) downward sloping Beveridge curve.

This theoretical study aims to clarify the (a priori) ambiguous effect of homeownership on unemployment. In general, in fact, homeownership discourages job mobility, but homeowners are less likely to be unemployed than tenants, since homeownership would seem to be positively related to human capital.

This study develops a modified version of the benchmark theoretic model of the labour market – the well-known “equilibrium unemployment theory” – where homeownership affects both the “Beveridge Curve” (BC, by means of job immobility) and the “Job Creation Condition” (JCC, by means of human capital).

The general result is that an increase in homeownership increases unemployment. Therefore, policymakers could encourage job mobility, before facilitating homeownership. This policy implication, however, may not apply in the case of high inflation and/or low nominal interest rate, and when the job destruction rate depends on the homeownership rate.

The model studies the steady-state equilibrium of the labour market, so the policy implications only relate to the long-run. The model, therefore, does not consider the short-run effects of homeownership on unemployment (which may differ from the long-term results).

The model suggests a public policy characterised by large investment in rail lines and subsidised commuter fares. By promoting a more efficient allocation of workers across regions (and, thus, job mobility), indeed, this policy can be a good way to increase employment, without harming homeownership.

The practical implication of this model is also a social implication, since it relates to homeownership and housing tenure.

To the best of author’s knowledge, this is the first model that introduces the key role of homeownership in the so-called “Equilibrium unemployment theory”. Precisely, the model uses a modified version of both the BC (which includes the negative effect of homeownership on the overall job search intensity of unemployed workers) and the JCC (which includes the positive effect of homeownership on both the business start-up and the human capital of workers). By comparing these two opposite effects, this theoretical work makes clearer the net effect of homeownership on unemployment.

The paper discusses the various models that can be used to analyse the aggregate impact of active labour market policy (ALMP) on labour market outcomes. The aggregate approach to policy evaluation is important. Contrary to evaluations based on micro data, it takes substitution, displacement and other indirect effects into account. The most promising framework for analysing the aggregate impact of ALMP is offered by a flow model approach of the labour market. However, other approaches such as VAR models are also treated in the paper. After discussing the theoretical models the paper gives a review of the empirical literature, in which these models are used to measure the aggregate impact of ALMP. On the basis of the results we are bound to conclude that ALMP makes a big difference to the level of unemployment. There is some evidence that disadvantaged groups benefit more from this type of policy than other groups. The fact that the impact is small on average may hide considerable variation between regions and sites. Future research should concentrate on attempting to relate this variation to differences in implementation. Then we might be able to identify the factors that are decisive for the success or failure of programmes which could then be used to improve ALMP.

The purpose of this paper is to compare two elements of lay-off costs in a dynamic model of the labor market and analyze the differences for business cycle dynamics and welfare.

The paper builds a general equilibrium Real Business Cycle model and introduces firing costs and severance payments. Labor market frictions are assumed to follow the famous search and matching approach.

The paper finds that firing costs imply a higher volatility over the cycle and have stronger negative welfare effects. Severance payments have a lower volatility, reduce unemployment, and reduce welfare by a smaller amount.

Policy reforms should be aimed to use severance payments and reduce the ring cost component of lay-off costs.

Increasing welfare and a more stable business cycle could be supported by using severance payments instead of firing costs.

This paper presents a general survey of the Swiss economy. It emphasises the various factors that have been put forward to explain the very low unemployment rate recorded in Switzerland up to the beginning of the 1990s. It also analyses the factors which may be held responsible for the dramatic reversal of the Swiss labour market situation, by considering the modification in the employers’ and workers’ behaviour in Switzerland as well as the changes observed in the structure of the foreign labour force. It comes to the conclusion that the unemployment observed since 1991 is not simply a consequence of a deterioration in the functioning of the Swiss labour market compared with earlier periods, but rather a result of changes in immigration policies and also the reflection in the statistics of a truer picture of the labour market imbalance created by the restructuring of the economy.

The purpose of this paper is to explore the matching process before and after the Great Recession in the Netherlands. The Dutch case is interesting because it is characterised by increasing matching efficiency.

This paper uses data from 2001 to 2014 to study the Dutch labour market matching process accounting for the three labour market states and their heterogeneities.

The elasticity of hires with respect to the short-term employed was significant, positive and countercyclical, while elasticities relating to new entrants were procyclical. The matching function (MF) displays constant returns to scale (CRTS) when using an alternative labour supply (LS) measure that includes the short-term employed as jobseekers. The findings are at odds with the idea of mismatch and a shortage of skills. Search frictions for employers were lower and vacancies were filled faster. This can be related to the fact that in a loose labour market context with increasing short-term employment, employers increase their hiring of employed workers which generates negative externalities on unemployed.

The implications concern the specification of the MF and the CRTS assumption when using unemployment as a LS measure.