Negative Shocks, Job Creation, and Selection. WWWforEurope Working Paper No. 11
High inter-country variability characterises the responsiveness of both output to (exogenous) shocks and employment to output contractions. We argue that inter-country differences in firm-size distributions contribute to explaining this variability. Within an open economy model, we show that competi...| Link(s) zu Dokument(en): | WIFO Publikation |
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| Veröffentlicht in: | WIFO Studies |
| Hauptverfasser: | , , , |
| Format: | book |
| Sprache: | Englisch |
| Veröffentlicht: |
2013
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| Zusammenfassung: | High inter-country variability characterises the responsiveness of both output to (exogenous) shocks and employment to output contractions. We argue that inter-country differences in firm-size distributions contribute to explaining this variability. Within an open economy model, we show that competitive selection processes are an important channel through which a shock affects aggregate employment. Intra-industry selection is then shown to influence the effectiveness of active labour market policies in countering the employment and welfare effects of a negative shock. We estimate a measure of the shape parameter of firm size distribution and study its effect on the employment-output relationship for a number of OECD countries. Our results confirm the key predictions of the theory. |
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