Search Results

You are looking at 1 - 10 of 32 items for :

  • "reservation productivity" x
Clear All
Mr. Pietro Garibaldi and Ms. Zuzana Brixiova

shocks that reduce the present discounted value of state sector jobs. We show that job-worker pairs select a reservation productivity level below which the job is immediately destroyed. Since wages and productivity are intrinsically linked, negative shocks are conducive to lower wages, and. in equilibrium, a higher reservation productivity implies a higher average wage. Finally, as the reallocation of jobs from the state to the private sector is completed, the economy converges to a traditional matching model, in the spirit of Pissarides (1990) . Since the

Mr. Pietro Garibaldi
This paper presents theory and evidence on the asymmetric effects of monetary policy on job creation and job destruction. First, it solves a dynamic matching model and it shows how interest rate changes result in an asymmetric response of job creation and destruction. Second, it looks at how changes in the federal fund rate affect gross job flows in the U.S. manufacturing industry, and it finds evidence of asymmetry. Tight policy increases job destruction and reduces net employment changes. Conversely, easy policy appears ineffective in stimulating job creation.
Mr. Pietro Garibaldi

heterogeneity in the value of the labor product. The idiosyncratic and job-specific risk for existing jobs is modeled as a jump process characterized by a Poisson arrival frequency and a common distribution of productivity. In equilibrium, existing entrepreneurs endogenously select a reservation productivity at which the continuation of a job is no longer profitable. We show that when interest rates are increased, existing entrepreneurs adjust their reservation productivity and immediately destroy any job that falls short of the newly selected value. Conversely, reductions in

Mr. Pietro Garibaldi and Ms. Zuzana Brixiova
This paper studies interactions between labor market institutions and unemployment dynamics in transition economies. It presents a dynamic matching model in which state sector firms endogenously shed labor and private job creation takes time. Two main conclusions arises. First, higher unemployment benefits increase steady-state unemployment, and, during the transition, they reduce the fall in real wages and speed up closure of state enterprises. Second, higher minimum wages can theoretically speed up the elimination of state sector jobs without affecting steady-state unemployment. These results are broadly consistent with existing evidence on the dynamics of unemployment and real wages in transition economies.
Mr. Pietro Garibaldi

labor product. The idiosyncratic and job-specific risk for existing jobs is modeled as a jump process characterized by a Poisson arrival frequency and a common distribution of productivity. In equilibrium, existing entrepreneurs endogenously select a reservation productivity at which the continuation of a job is no longer profitable. We show that when interest rates are increased, existing entrepreneurs adjust their reservation productivity and immediately destroy any job that falls short of the newly selected value. Conversely, reductions in interest rates result in

International Monetary Fund

permissions arrive. Differentiating Eq. (1) with respect to e, it shows that J(.) is a piece-wise increasing function of ε and its derivative reads: J ’ ( ɛ ) = σ / ( r + λ ) ∀ J ( ɛ ) ≥ 0 , ( 2 ) and, J ’ ( ɛ ) = σ / ( r + λ + s ) ∀ J ( ɛ ) < 0. ( 3 ) If we define the reservation productivity ε d as: J(ε d ) = 0, making use of Eqs. (1) and (3), after an

Mr. Domenico Fanizza and Miss Taline Koranchelian

)   ∀   J ( є ) ≥ 0 , ( 2 ) and, J ′ ( є ) = σ / ( r + λ + s )   ∀   J ( є ) < 0 . ( 3 ) If we define the reservation productivity є d as: J ( є d ) ≡ 0 , and make use of equations (1) and (3) , after an integration by parts, the expected value of a job in equation (1) reads: ∫ є 1 є u

Mr. Domenico Fanizza and Miss Taline Koranchelian
This paper applies a search matching model with firing restrictions to examine whether the existence of firing restrictions affects the outcome of the matching process and the natural rate of unemployment in Tunisia. The paper concludes that the removal of firing restrictions is likely to produce a favorable but limited impact on unemployment in Tunisia.
Mr. Pietro Garibaldi and Ms. Zuzana Brixiova

productivity index i * , such that a job is kept running as long as the productivity of the job is at least as high as i * .When the productivity falls below i * , the job is destroyed. Formally, the reservation productivity i * is the last productivity index with a positive total surplus and satisfies the following condition: i * : W i * s > 0 ,   W i * − 1 s ≤ 0 . ( 16 ) The definition of the reservation productivity completes the description of

Mr. H. Takizawa
Using a search and matching labor market equilibrium model, this paper quantifies lost labor productivity and consumption per worker that emerges from the restrictions on dismissals. Dismissal restrictions hamper the efficient reallocation of workers, with workers remaining longer in jobs. But the restrictions also tend to induce job-specific investments. A calibration exercise applied to Portugal suggests that the restrictions on dismissal slow the pace of worker reallocation and cause substantial losses of labor productivity and consumption. Although lower worker mobility induces job-specific investment that offsets part of the labor productivity and consumption losses, the size of this offsetting effect is, at most, modest.