DP3848 Aggregate Growth and the Efficiency of Labour Reallocation
|Author(s):||Simon Burgess, Daniel Mawson|
|Publication Date:||March 2003|
|Keyword(s):||growth, labour efficiency, labour market institutions|
|Programme Areas:||Labour Economics|
|Link to this Page:||www.cepr.org/active/publications/discussion_papers/dp.php?dpno=3848|
We consider the potential importance of labour market efficiency for aggregate growth. The idea is that efficient labour markets move workers more quickly from low to high productivity sites, thereby raising aggregate productivity growth. We define a measure of labour market efficiency as a structural parameter from a matching function. Using labour market data on 15 OECD countries, we estimate this and show that it has a significant effect on growth. The results are robust to a number of different estimation techniques. The quantitative impact of market efficiency is not trivial.