MARKET RIGIDITIES AND LABOR-MARKET FLEXIBILITY - AN INTERNATIONAL COMPARISON

The effects of product and labour market rigidities on labour market d ynamics are analysed using a panel of two-digit ISIC level data for se ven OECD countries. As expected, employment protection was found to sl acken labour market flows. Centralized wage bargaining also reduced th e degree of job turnover, although a priori the effect of centralized wage bargaining on labour market flexibility is not clear. Industry su bsidies have a positive impact on job reallocation by increasing job c reation. The labour market dynamics are also compared in detail for tw o economies regarded as extremes in terms of regulations, the U.S. and Norway.