Employment Protection Reform in Search Economies

Olivier L'Haridon and Franck Malherbet

No 2008-26, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

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 layoffs and introduces a U.S.-style experience- rating system, which we model as a combination of a layoff tax and a payroll subsidy. The reform considered shows that it is possible to improve the efficiency of employment protection policies without affecting 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 finance, as most studies acknowledge, but also as part and parcel of a virtuous EPL system.

Keywords: Search and Matching Models; Employment Protection; State-Contingent Layoff Tax; Experience-Rating (search for similar items in EconPapers)
JEL-codes: J41 J48 J60 (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-dge, nep-lab and nep-reg
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://thema.u-cergy.fr/IMG/documents/2008-26.pdf (application/pdf)

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)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ema:worpap:2008-26

Access Statistics for this paper

More papers in THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise Contact information at EDIRC.
Bibliographic data for series maintained by Stefania Marcassa ( this e-mail address is bad, please contact ).