Wage rigidity and job creation

Recent research in macroeconomics emphasizes the role of wage rigidity in accounting for the volatility of unemployment fluctuations. We use worker-level datafrom the CPS to measure the sensitivity of wages of newly hired workers to changesin aggregate labor market conditions. The wage of new hires, unlike the aggregatewage, is volatile and responds almost one-to-one to changes in labor productivity.We conclude that there is little evidence for wage stickiness in the data. We alsoshow, however, that a little wage rigidity goes a long way in amplifying the responseof job creation to productivity shocks.

Job creation under liquidity constraints: The Spanish case

This paper shows that liquidity constraints restrict jobcreation even when labor markets are flexible. In a dynamicmodel of labor demand, I show that in an environment of imperfect capital and imperfect labor markets, firms usetemporary contracts to relax financial constraints. Evidence for the predictions of the model is presented using Spanish data from the CBBE (Central de Balances del Banco de España - Balance Sheet data from the Bank of Spain). It is shown that firms substitute temporary laborfor permanent one and use less debt as their financial position improves. In particular, it is rejected that Spanish firms operate in an environment of free capital markets and of no labor adjustment costs. The labor reform of 1984, which created temporary contracts, implied to some extent a relaxation of liquidity constraints.Accordingly, firms used these contracts more extensivelyand used less debt; however, as capital markets continueto be imperfect, permanent job creation continues to beslow. Consequently, relaxation of liquidity constraints should also be part of a job creation strategy.

Job creation in Latin America in the 1990s: the foundation for social policy

Includes bibliography

Private sector job creation /

"February 1983."

Public job creation and the current recession : an analysis of the alternatives /

"February 1983."

Job creation and the revitalization of small business : a report of the Committee on Small Business, House of Representatives, Ninety-seventh Congress, second session.

Item 1008-C, 1008-D (microfiche)

Job creation and employment opportunities : the United States labor market, 1993-1996 : a report /

"April 23, 1996."

Evaluation of the EDWAA job creation demonstration /

Includes bibliographical references.