Employment protection legislation matters for the Phillips Curve

Daniele Siena and Riccardo Zago

Economics Letters, 2022, vol. 220, issue C

Abstract: Liberal reforms of employment protection legislation (EPL) aim at fostering the flexibility, dynamism and fluidity of the labor market without increasing unemployment. A New Keynesian model with search-and-matching frictions implies that such type of reforms have also a direct impact on the structural relationship between prices and unemployment, i.e. the Phillips Curve (PC). We assess empirically the existence of this channel considering 19 episodes of EPL reforms across 13 countries. Consistently with the theory, countries that experienced an employment protection liberalization witnessed a flattening of the PC just after the reform.

Keywords: Employment protection; Phillips Curve; Labor market fluidity (search for similar items in EconPapers)
JEL-codes: E31 E32 J63 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165176522003573
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:220:y:2022:i:c:s0165176522003573

DOI: 10.1016/j.econlet.2022.110883

Access Statistics for this article

Economics Letters is currently edited by Economics Letters Editorial Office

More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().