Labor Market Regulation and its Characteristics: Comparison Between Czech Republic and Austria

In this paper, we are trying to compare the labor market regulation in the Czech Republic and Austria and its structural parameters that characterize the given labor markets. In order to do that, we estimate the New-Keynesian model with matching frictions and nominal wage rigidities. Labor market regulation is proxied by worker's bargaining power over the wage. This main parameter is moving inside the interval and express a share of the total surplus that arises from filling the vacancy. In fact it expresses the state of who gains more from the added value that the vacancy is filled (worker or employer). Results indicate that workers in Austria and the Czech Republic have almost the same bargaining power that arises from the labor market settings.