Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/105256
Authors: 
Lochner, Benjamin
Year of Publication: 
2014
Series/Report no.: 
IWQW Discussion Paper Series 14/2014
Abstract: 
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.
Subjects: 
Dual Labor Market
Employment Protection
Firing Costs
Unemployment
JEL: 
E24
E32
E52
J23
J41
J63
Document Type: 
Working Paper

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