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
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)
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