Employment protection in dual labor markets: Any amplification of macroeconomic shocks?

Arbeitspapier

Although labor market duality is a widespread phenomenon in many OECD countries, there is yet no research consent on the effects of duality on labor market dynamics and performance. Against this background, using a New Keynesian model with unemployment, this paper theoretically investigates the importance of labor market duality on labor market volatilities. The new insight is that duality leads to a non-linear reaction of unemployment volatility for both supply and demand shocks. A subsequent empirical panel data analysis confirms the model predictions. Uncovering the non-linearity in unemployment volatility helps reconciling previous divergent research results.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IWQW Discussion Papers ; No. 14/2014

Classification and Topics

• Classification: Wirtschaft ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity ; Business Fluctuations; Cycles ; Monetary Policy ; Labor Demand ; Labor Contracts ; Labor Turnover; Vacancies; Layoffs
• Subject: Dual Labor Market ; Employment Protection ; Firing Costs ; Unemployment

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lochner, Benjamin
• Event: Veröffentlichung
• (who): Friedrich-Alexander-Universität Erlangen-Nürnberg, Institut für Wirtschaftspolitik und Quantitative Wirtschaftsforschung (IWQW)
• (where): Nürnberg
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/105256
• Last update: 10.03.2025, 11:43 AM CET