Employment protection reform in search economies

Olivier L'Haridon and Franck Malherbe

No 910, HEC Research Papers Series from HEC Paris

Abstract: The design of employment protection legislation (EPL) is of particular importance in the European debate on the contours of labor market reform. In this article we appeal to an equilibrium unemployment model to investigate the virtues of EPL reform which reduces the red tape and legal costs associated with layo s and introduces a U.S.-style experiencerating system, which we model as a combination of a layo tax and a payroll subsidy. The reform considered shows that it is possible to improve the eciency of employment protection policies without a ecting the extent of worker protection on the labor market. These results are consistent with the conventional wisdom that experience rating is desirable, not only as an integral component of unemployment-compensation nance, as most studies acknowledge, but also as part and parcel of a virtuous EPL system.

Keywords: Search and Matching Models; Employment Protection; State-Contingent Layo Tax; Experience-Rating (search for similar items in EconPapers)
JEL-codes: J41 J48 J60 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2008-04-01
New Economics Papers: this item is included in nep-dge and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Employment protection reform in search economies (2009)
Working Paper: Employment Protection Reform in Search Economies (2008)
Working Paper: Employment Protection Reform in Search Economies (2008)
Working Paper: Employment Protection Reform in Search Economies (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:0910

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