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IZA Workshop Labor Markets and Institutions: Determinants and Outcomes

Organizers: Pierre Cahuc (Sciences Po, Paris and IZA), Winfried Koeniger (University of St. Gallen and IZA)
Location:IZA, Bonn
Date:December 03, 2004 - December 04, 2004

Event Manager:

Ulrike Maurer (IZA)


How do labor market institutions shape labor market outcomes, and what determines the choice of these institutions? In December 2004, leading European and North American experts in this area gathered at IZA to discuss the most recent theoretical and empirical advances in these research questions.

Several papers investigated the role of employment protection legislation (EPL) in the labor market. For the German case, evidence was provided that variable enforcement of dismissal protection does not seem to have a sizeable effect on worker flows. However, employment protection should matter more for temporary than for highly persistent shocks. This hypothesis was supported by constructing a measure of job flows caused by the seasonal cycle for 14 OECD countries. In another contribution, answers of European households were analyzed, finding that perceived job security is stronger influenced by unemployment benefits than employment protection. Furthermore, it was theoretically and empirically shown that the male breadwinner conception is an important determinant of EPL. This conception’s strength was shown to be related to religious values: their differences can explain variation in the strictness of EPL.

Other studies dealt with the effects of unemployment insurance and job search assistance on labor market transitions. For France, empirical evidence was provided that job search assistance has reduced the duration and recurrence of unemployment. Comparing the experiences of European countries, another paper found that higher unemployment benefits reduce exit rates from unemployment. However, such benefits might lead to more subsequent employment stability if the recipients have been unemployed for a short term.

Furthermore, the workshop presented research results on credit market structures and labor market institutions. Labor market regulation and redistribution seem to be more pronounced in countries with more credit market imperfections. Another session presented research results on interactions of unions and labor market outcomes. Evidence was presented that union density increases unemployment and wages, and in turn unemployment raises union density. A theoretical contribution analyzed the endogeneity of bargaining regimes, arguing that more regulated product markets, in which more rents are available, make union bargaining more attractive with adverse consequences for employment.


Friday, December 03:

13:30       Session: Credit Market Structure and Labor Market Institutions
13:30 - 14:30   Alessandra Fogli (New York University*))
  "Endogenous Labor Market Rigidities and Family Ties"
  Discussant: Pierre Cahuc (Sciences Po, Paris and IZA)
14:30 - 15:30   Charles Grant (University of Reading*)), Winfried Koeniger (IZA)
  "Redistributive Taxation and Bankruptcy in US States"
  Discussant: Justin Wolfers (University of Michigan and IZA)
15:30 - 16:00   Coffee/Tea Break
16:00       Session: Product Markets, Unions and Labor Market Performance
16:00 - 17:00   Christian Haefke (New York University, Abu Dhabi and IZA*)), Monique Ebell (Humboldt University)
  "The Missing Link: Product Market Regulation, Collective Bargaining and the European Unemployment Puzzle"
  Discussant: Daniele Checchi (University of Milan and IZA)
17:00 - 18:00   Daniele Checchi (University of Milan and IZA*)), Luca Nunziata (University of Milan and IZA)
  "Endogeneity of Union Density and Labour Market Performance"
  Discussant: Christian Haefke (New York University, Abu Dhabi and IZA)
19:30       Dinner

Saturday, December 04:

09:30       Session: Unemployment Insurance, Job-Search Assistance and Labor Market Transitions
09:30 - 10:30   Muriel Dejemeppe (Université catholique de Louvain*)), Bruno Crépon (CREST-INSEE), Marc Gurgand (DELTA and CREST-INSEE)
  "Counseling the unemployed: does it lower unemployment duration and recurrence?"
  Discussant: Konstantinos Tatsiramos (University of Luxembourg and IZA)
10:30 - 11:30   Konstantinos Tatsiramos (University of Luxembourg and IZA*))
  "The Effect of Unemployment Insurance on Unemployment Duration and the Subsequent Employment Stability"
  Discussant: Muriel Dejemeppe (Université catholique de Louvain)
11:30 - 12:00   Coffee/Tea Break
12:00       Session: Redistributive Policies
12:00 - 13:00   John Hassler (Stockholm University*)), Per Krusell (Princeton and Stockholm University), Kjetil Storesletten (Oslo University), Fabrizio Zilibotti (Stockholm University)
  "On the Optimal Timing of Capital Taxes"
  Discussant: Fabien Postel-Vinay (University College London and IZA)
13:00 - 14:15   Lunch
14:15       Session: Job Security, Job Protection and their Determinants
14:15 - 15:15   Fabien Postel-Vinay (University College London and IZA*)), Andrew Clark (DELTA and IZA)
  "Job Security and Job Protection"
  Discussant: Thomas K. Bauer (RWI and IZA)
15:15 - 16:15   Yann Algan (Sciences Po, Paris and IZA*)), Pierre Cahuc (University of Paris I and IZA)
  "Job Protection: The Macho Hypothesis"
  Discussant: Alessandra Fogli (New York University)
16:15 - 16:45   Coffee/Tea Break
16:45       Session: Employment Protection and Job or Worker Flows
16:45 - 17:45   Justin Wolfers (University of Michigan and IZA*))
  "Measuring the Effects of Employment Protection on Job Flows: Evidence from Seasonal Cycles"
  Discussant: Winfried Koeniger (University of St. Gallen and IZA)
17:45 - 18:45   Thomas K. Bauer (RWI and IZA*)), Stefan Bender (IAB), Holger Bonin (IZA)
  "Dismissal Protection and Worker Flows in Small Establishments"
  Discussant: Marco Leonardi (University of Milan and IZA)
20:00       Dinner

*) current affiliation


We wish to thank the Fritz Thyssen Stiftung for financial support.