Uncertainty and the Politics of Employment Protection

Andrea Vindigni, Simone Scotti and Cristina Tealdi

Journal of Labor Economics, 2015, vol. 33, issue 1, 209 - 267

Abstract: This paper investigates social preferences over employment protection regulation in a general equilibrium model of dynamic labor demand and sheds some light on the comparative dynamics of Eurosclerosis. When firing costs are low, a transition to a rigid labor market is favored by all the employed workers with idiosyncratic productivity below some threshold; when their status quo level is high, preserving a rigid labor market is favored only by the employed with intermediate productivity. A more volatile environment and a lower rate of productivity growth increase the political support for labor market rigidity only in high-rents economies.

Date: 2015
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Related works:
Working Paper: Uncertainty and the Politics of Employment Protection (2013)
Working Paper: Uncertainty and the Politics of Employment Protection (2013)
Working Paper: Uncertainty and the Politics of Employment Protection (2008)
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