Welfare Effects of Employment Protection

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

No 3396, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Employment protection is often related to costs incurred by firms when they fire a worker. The stability of the employment relationship, enhanced by employment protection, is also favourable to the productivity of the job. We analyse employment protection focusing on this trade-off between adjustment costs and productivity. We show that from a welfare point of view there is an optimal degree of employment protection.

Keywords: employment protection; hold-up; human capital; reforms; welfare (search for similar items in EconPapers)
JEL-codes: J41 J63 J68 (search for similar items in EconPapers)
Date: 2002-05
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