# 99-010/3 (1999-02-18)

Pieter A. Gautier, Netherlands Bureau for Economic Policy Analysis and Vrije Universiteit Amsterdam; Gerard J. van den Berg, Vrije Universiteit Amsterdam and CEPR; Jan C. van Ours, CentER, Tilburg University and CEPR; Geert Ridder, Johns Hopkins University
Search, quilibrium, Labor Market, wage dispersion

This discussion paper resulted in a publication in Econometrica (1998). Volume 66, issue 5, pages 1183-1221.

This paper analyzes the determinants of lay-offs, job-to-job movements and totalseparations with a unique data set that combines information on individual firmsand their workers. We are in particular interested in whether the lay-offpolicy of firms can explain the relatively high level of unemployment amongstlower educated workers and the relatively strong sensitivity of their unemploymentrate to the business cycle. We find that lay-off rates decrease with educationbut that the change over the cycle in the lay-off rate of workers with a lowerlevel of education compared to that of workers with a higher level of education can notexplain the stronger cyclicality of the unemployment rate for lower educatedworkers. We conclude that this stronger cyclicality is not due to the personnelpolicy of firms.