OECD Social, Employment and Migration Working Papers
This series is designed to make available to a wider readership selected labour market, social policy and migration studies prepared for use within the OECD. Authorship is usually collective, but principal writers are named. The papers are generally available only in their original language - English or French - with a summary in the other.
- ISSN: 1815199X (online)
- https://doi.org/10.1787/1815199X
Institutional Determinants of Worker Flows
A Cross-Country/Cross-Industry Approach
There is little cross-country comparative evidence on the way labour market institutions shape gross
job and worker flows, by and large because comparable data for many countries are scarce. By using a
unique harmonised dataset on hirings and separations at the industry-level for a large majority of OECD
countries, we fill this gap, by analysing the role of a number of labour and product market institutions in
shaping cross-country differences in gross worker flows. In order to identify the effect of policies and
institutions we consider an industry-level difference-in-difference approach. The basic premise of this
approach is that the effect of a particular policy on gross job flows is greater in industries where the policy
is more likely to constrain firm behaviour. We check, however, the robustness of our results using more
standard cross-country/time-series estimates. The richness of the data available to us allows estimating the
impact of the institutions also on the transitions from job to job, the transitions from job to nonemployment
and the transitions from non-employment to jobs. We find that cross-country differences in
job protection for open-ended contracts and unemployment benefits can explain a large share of crosscountry
variation in gross worker flows. However, the effect of the former is essentially limited to job-tojob
flows.
Keywords: cross-country data, job-to-job transitions, worker flows, labour market institutions
JEL:
J23: Labor and Demographic Economics / Demand and Supply of Labor / Labor Demand;
J24: Labor and Demographic Economics / Demand and Supply of Labor / Human Capital; Skills; Occupational Choice; Labor Productivity;
J63: Labor and Demographic Economics / Mobility, Unemployment, Vacancies, and Immigrant Workers / Labor Turnover; Vacancies; Layoffs
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