Employment Protection Regulations and New Hiring

Kyota Eguchi
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Kyota Eguchi: Faculty of Economics, University of Tokyo

No CIRJE-F-88, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: In the real world, there are various regulations concerned with the dismissal of employees. We consider the effects of dismissal regulations with a simple incomplete labor contract model. Under moral hazard, the existence of a regulation always increases wage level and decreases firms' profits. However, the regulation can improve social welfare if workers' outside option is sufficiently low. Furthermore, we will show that the regulation can enhance new hiring.

Pages: 24 pages
Date: 2000-08
New Economics Papers: this item is included in nep-lab, nep-law and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:tky:fseres:2000cf88

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