DP3978 Measuring Labour Market Frictions: A Cross-Country Comparison

Author(s): Geert Ridder, Gerard van den Berg
Publication Date: July 2003
Keyword(s): cross-country comparisons, job search, labour market policy, minimum wage, mobility, monopsony power, search frictions, wages
Programme Areas: Labour Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=3978

In this Paper we define and estimate measures of labour market frictions using data on job durations. We compare different estimation methods and different types of data. We propose and apply an unconditional inference method that can be applied to aggregate duration data. It does not require wage data, it is invariant to the way in which wages are determined, and it allows workers to care about other job characteristics. The empirical analysis focuses on France, but we perform separate analyses for the USA, the UK, Germany and the Netherlands. We quantify the monopsony power due to search frictions and we examine the policy effects of the minimum wage, unemployment benefits and search frictions.