Job protection, housing market regulation, and the youth

Antoine Bonleu (), Bruno Decreuse and Tanguy van Ypersele

Journal of Public Economic Theory, 2019, vol. 21, issue 6, 1017-1036

Abstract: Young Europeans experience high unemployment rates, job instability, and late emancipation. Meanwhile, they do not support reforms weakening protection on long‐term contracts. In this paper, we suggest a possible rationale for such reform distaste. When the rental market is strongly regulated, landlords screen applicants with regard to their ability to pay the rent. Protecting regular jobs offers a second‐best technology to sort workers, thereby increasing the rental market size. We provide a model where nonemployed workers demand protected jobs despite unemployment and the share of short‐term jobs increases, whereas the individual risk of dismissal is unaffected. Our theory can be extended to alternative risks and markets involving correlated risks and commitment under imperfect information.

Date: 2019
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https://doi.org/10.1111/jpet.12323

Related works:
Working Paper: Job Protection, Housing Market Regulation and the Youth (2019)
Working Paper: Job Protection, Housing Market Regulation and the Youth (2016)
Working Paper: Job Protection, Housing Market Regulation and the Youth (2016)
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