Welfare-Improving Employment Protection

Michèle Belot (), Jan Boone and Jan van Ours ()

Economica, 2007, vol. 74, issue 295, pages 381-396

Abstract: This paper derives new results on the welfare effects of employment protection. Using data from 17 OECD countries, we show that there exists an inverse U-shape relationship between employment protection and economic growth. Using a simple theoretical model with non-contractible specific investments, we show that over some range increasing employment protection does indeed raise welfare. We also show that the optimal level of employment protection depends on other labour market features, such as the bargaining power of workers and the existence of wage rigidities like the minimum wage. Copyright (c) The London School of Economics and Political Science 2007.

Downloads: (external link)
http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0335.2006.00576.x link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Welfare Improving Employment Protection (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0013-0427

Access Statistics for this article

Economica is edited by Frank Cowell, Tore Ellingsen and Alan Manning

More articles in Economica from London School of Economics and Political Science
Contact information at EDIRC.
Series data maintained by Christopher F. Baum ().