evidence for a large number of cases and/or countries and calculates that on average, "For each additional job in the total stock of employment there are nine changes", including dismissals, attrition, new entrants, and reallocation (see also Davis and Haltiwanger, 1990, 1992; Roberts and Tiebout, 1995).

The essence ofjob creation is a decision by an employer to seek a new worker for the purpose of engaging in production and of generating profits. Continuity in a workeremployer relationship is a reflection of success in the joint effort, and is typically accompanied by job-specific investments such as training. Job destruction is reflected in a separate decision to terminate an existing employment relationship because the expected profitability of the productive activity no longer justifies its continuation.

Individual workers, unions, and policymakers have traditionally emphasized job security as a means to improve workers' well being. Nevertheless, the best way workers can respond to the opportunities and risks associated with a more competitive and globalized economy is by increasing their capacity to adapt and to move to better-paid jobs. To facilitate these changes, workers have to rely on well-functioning markets for schooling and training, housing, and other services (such as health insurance) that are sometimes offered as a fringe benefit associated to employment. Furthermore, in a world characterized by abundant opportunities and competitive markets, job security is increasingly offered by the labor market and not by a particular employer. Not only is job security more difficult to guarantee at the enterprise level, but also legal mandates that penalize dismissals tend to discourage risk taking and job creation on the part of entrepreneurs. Furthermore, the illusion that legal mandates would somehow guarantee job security tends to reduce individuals' incentives to invest in their human capital.

Job security rules are not only a deterrent to taking risks in the hiring process, but they also induce "statistical discrimination" and encourage "poaching." The high costs of dismissals induce employers to rely more heavily on third party information about workers, including evidence on their performance in other companies, so that the likelihood of having to dismiss them is reduced. For the same reasons, opportunities for workers that come from distant places or from new schools would be limited, since they carry less information for employers.

The Indonesian system can be improved by allowing the termination of contracts by the unilateral decision of the worker or the employer and possibly by establishing a minimum compensation for dismissal. This change would encourage voluntary agreements between workers and employers that allow for the sharing of risks, specially if accompanied by improvements in the system of representation and collective bargaining. It is easy to see that such a change would provide widespread opportunities to entry into jobs that offer longer term employment opportunities, with the terms and duration of those contracts to be negotiable.

As can be seen in Figure 4, the handling of dismissals has become an increasingly important task for the Ministry of Manpower. After a detailed analysis of Indonesia's 20