Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/33647
Authors: 
Sala, Héctor
Silva, José Ignacio
Year of Publication: 
2005
Series/Report no.: 
IZA Discussion Papers 1823
Abstract: 
We present a Search and Matching model with heterogeneous workers (entrants and incumbents) that replicates the stylized facts characterizing the US and the Spanish labor markets. Under this benchmark, we find the Post-Match Labor Turnover Costs (PMLTC) to be the centerpiece to explain why the Spanish labor market is as volatile as the US one. The two driving forces governing this volatility are the gaps between entrants and incumbents in terms of separation costs and productivity. We use the model to analyze the cyclical implications of changes in labor market institutions affecting these two gaps. The scenario with a low degree of workers' heterogeneity illustrates its suitability to understand why the Spanish labor market has become as volatile as the US one.
Subjects: 
search
matching
training
firing costs
productivity differentials
JEL: 
J23
J24
J31
J41
J63
J64
Document Type: 
Working Paper

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