Labour market institutions and aggregate fluctuations in a search and  matching model
By: Francesco Zanetti.
Contributors: Bank of England.
Series: Working paper -- no. 333; Working paper (Bank of England : Online) -- no. 333.
Publisher: Bank of England
Published: 2007
Place of publication: London
Language: eng
Format: Electronic resource
Description: "This paper explores the influence of some key institutional features of the labour market on  aggregate fluctuations. It uses a dynamic, stochastic, general equilibrium model characterised by  search and matching frictions in the labour market and nominal rigidities in the goods market. It  finds that firing costs and unemployment benefits can have substantial effects on aggregate  fluctuations. Increasing firing costs decreases the volatility of output, employment and job flows,  due to the reduction of the mass of jobs sensitive to disturbances and lower incentives for firms to  hire and fire workers. Hence, firms adjust to shocks mainly through prices, and inflation then  becomes more volatile. Raising unemployment benefits has the reverse effect on aggregate  fluctuations."--Bank of England web site.
Notes: Title from PDF file as viewed on Feb. 4, 2008.

Includes bibliographical references.

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