Deposit-Refund on Labor: A Solution to Equilibrium Unemployment?

Ben Heijdra () and Jenny Ligthart

IMF Staff Papers, 2001, vol. 48, issue 3, 8

Abstract: The paper studies the employment effects of a deposit-refund scheme on labor in a simple search-theoretic model of the labor market. It is shown that if a firm pays a deposit when it fires a worker, to be refunded when it employs the same or another worker, the vacancy rate increases and the unemployment rate declines. The scheme introduces rigidities in the labor market, however, which may be undesirable in countries wanting to liberalize their labor markets. Copyright 2002, International Monetary Fund

JEL-codes: J3 J68 (search for similar items in EconPapers)
Date: 2001
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Related works:
Working Paper: Deposit-Refundon Labor: A Solution to Equilibrium Unemployment? (2000)
Working Paper: Deposit-refund on labor: a solution to equilibrium unemployment? (1999)
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