Job Protection, Housing Market Regulation and the Youth

Antoine Bonleu (), Bruno Decreuse and Tanguy van Ypersele

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Abstract: Young Europeans experience high unemployment rates, job instability, and late emancipation. Meanwhile, they do not support reforms weakening protection on long-term contracts. In this paper, we suggest a possible rationale for such reform distaste. When the rental market is strongly regulated, landlords screen applicants with regard to their ability to pay the rent. Protecting regular jobs offers a second-best technology to sort workers, thereby increasing the rental market size. We provide a model where nonemployed workers demand protected jobs despite unemployment and the share of short-term jobs increases, whereas the individual risk of dismissal is unaffected. Our theory can be extended to alternative risks and markets involving correlated risks and commitment under imperfect information.

Keywords: labor market dualism; screening; rent default (search for similar items in EconPapers)
Date: 2019-12
New Economics Papers: this item is included in nep-law
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02566548
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Published in Journal of Public Economic Theory, 2019, 21 (6), pp.1017-1036. ⟨10.1111/jpet.12323⟩

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Related works:
Journal Article: Job protection, housing market regulation, and the youth (2019)
Working Paper: Job Protection, Housing Market Regulation and the Youth (2016)
Working Paper: Job Protection, Housing Market Regulation and the Youth (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-02566548

DOI: 10.1111/jpet.12323

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