Employment protection reform in search economiesOlivier L'Haridon () and Franck MALHERBET European Economic Review, 2009, vol. 53, issue 3, pages 255-273 Abstract: The design of employment protection legislation (EPL) is of particular importance in the European debate on the contours of labor-market reform. In this article we appeal to an equilibrium unemployment model to investigate the virtues of EPL reform which reduces the red tape and legal costs associated with layoffs and introduces a U.S.-style experience-rating system, which we model as a combination of a layoff tax and a payroll subsidy. The reform considered shows that it is possible to improve the efficiency of employment protection policies without affecting the extent of worker protection on the labor market. These results are consistent with the conventional wisdom that experience rating is desirable, not only as an integral component of unemployment-compensation finance, as most studies acknowledge, but also as part and parcel of a virtuous EPL system. Keywords: Search; and; matching; models; Employment; protection; State-contingent; layoff; tax; Experience; rating (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: http://EconPapers.repec.org/RePEc:eee:eecrev:v:53:y:2009:i:3:p:255-273 Access Statistics for this article European Economic Review is edited by G. A. Pfann, Z. Eckstein, E. Gal-Or, T. Gylfason and J. Von Hagen More articles in European Economic Review from Elsevier |
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