Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/125666
Authors: 
Kopasker, Daniel
Görg, Holger
Molana, Hassan
Montagna, Catia
Year of Publication: 
2013
Series/Report no.: 
WWWforEurope Working Paper 11
Abstract: 
High inter-country variability characterises the responsiveness of both output to (exogenous) shocks and employment to output contractions. We argue that intercountry 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.
Subjects: 
Job creation
employment subsidies
competitive selection
international trade
JEL: 
E22
E64
F12
F41
Document Type: 
Working Paper
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