Journal of Political Economy Vol. 101 No. 5 1993
Job Turnover and Policy Evaluation: A General Equilibrium Analysis
Abstract
Recent empirical work indicates that job creation and destruction rates are large, implying significant amounts of job reallocation across firms. This paper builds a general equilibrium model of this reallocation process, calibrates it using data on firm-level dynamics, and evaluates the aggregate implications of policies that interfere with this process. We find that a tax on job destruction at the firm level has a sizable negative impact on total employment: a tax equal to 1 year's wages reduces employment by roughly 2.5 percent. More striking, however, are the welfare consequences: the cost in terms of consumption of this same tax is greater than 2 percent.
- DOI
- 10.1086/261909
- Volume
- 101
- Issue
- 5
- Pages
- 915-938
- Language
- en
- Sources
- openalex crossref