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Job protection, industrial relations and employment

Giulio Piccirilli ()
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Giulio Piccirilli: DISCE, Università Cattolica

No ieil0050, DISCE - Quaderni dell'Istituto di Economia dell'Impresa e del Lavoro from Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE)

Abstract: In a dynamic stochastic monopoly union model we show that firing costs have a small and ambiguous impact on the level of employment if the union precommits to future wages. Further, in comparison with the commitment equilibrium and for very general union preferences, the no-commitment equilibrium exhibits higher wages and a lower employment level. Since commitment-like equilibria are more likely in cooperative bargain environments, these results suggest that, coeteris paribus, the interaction between employment protection and the quality of industrial relations reduces unemployment. We provide evidence on OECD countries which is consistent with this predictions.

Keywords: Firing costs; unemployment; industrial relations. (search for similar items in EconPapers)
JEL-codes: J23 J51 J63 (search for similar items in EconPapers)
Pages: 39
Date: 2007-10
New Economics Papers: this item is included in nep-bec, nep-dge and nep-lab
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