Employment protection and unemployment benefits: On technology adoption and job creation in a matching model

Kjell Lommerud (), Steinar Vagstad and Odd Rune Straume

No 11192, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We analyse the effects of different labour market policies –employment protection, un- employment bene…ts and payroll taxes –on job creation and technology choices in a model where fi…rms are randomly matched with workers of different productivity and wages are de- termined by ex-post bargaining. The model is characterised by two intertwined sources of inefficiency, namely a matching externality and a hold-up externality associated with work- ers’bargaining strength. Results depend on the relative importance of the two externalities and on worker risk aversion. ‘Flexicurity’, meaning low employment protection and generous unemployment insurance, can be optimal if the hold-up problem is relatively important and workers value income security much.

Keywords: Unemployment in-; Technology adoption; Job creation; Employment protection (search for similar items in EconPapers)
JEL-codes: H21 J38 J65 O31 (search for similar items in EconPapers)
Date: 2016-03
New Economics Papers: this item is included in nep-dge, nep-lab, nep-pbe and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Employment Protection and Unemployment Benefits: On Technology Adoption and Job Creation in a Matching Model (2018)
Working Paper: Employment protection and unemployment benefits: on technology adoption and job creation in a matching model (2012)
Working Paper: Employment protection and unemployment benefits: On technology adoption and job creation in a matching model (2012)
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