The reallocation of labour: an international comparison using job tenure

This paper sets out the issues surrounding the optimal amount of job reallocation. The key factors are the trainability of the workforce, the volatility of demand and the cost of contract termination. The paper uses an international dataset to characterise the nature of labour reallocation and to isolate the effect of country-specific factors. We investigate the extent to which these country differences can be explained by the trainability of the workforce and employment protection legislation. We find that both of these have a significant role to play in affecting the reallocation of labour. In addition, we show that the impact of the country-specific factors varies dramatically by age and industry: much larger differences are found among older workers than younger ones, and in retail trade than in manufacturing.