Three essays on frictional labor markets

Defense date: 17 May 2010Examining Board: Prof. Lars Ljungqvist, Stockholm School of Economics Prof. Salvador Ortigueira, EUI Prof. Morten Ravn, University College London, Supervisor Prof. Eran Yashiv, Tel Aviv UniversityThe labor market is central to many issues in economics, including business cycles, unemployment, inequality, education, and growth. Moreover, it is the largest single market in most economies and it is fundamental in determining individual and household well-being. Therefore, a good understanding of the many phenomena that we observe in modern societies requires knowledge of the functioning of the labor market. It is the aim of this dissertation to improve and to deepen this knowledge and it does so by investigating three important labor market phenomena. In the first chapter, I address the divergence of unemployment rates between the U.S. and Europe. In the second chapter, I investigate the life-cycle dynamics of individual job mobility. The third chapter empirically sheds some light on the causes and consequences of job separation. In particular, it addresses the following three questions: (a) What are the factors determining the separation hazard of employment relationships? (b) Which employer-employee matches are more likely to dissolve due to a layoff rather than a voluntary quit? (c) What are the effects of a voluntary quit and a layoff, respectively, on re-employment wages