Firing Costs, Payroll Taxes and Unemployement
AbstractUsing a simple extension of Mortensen and Pissarides (1994), we show that substituting layoff taxes for payroll taxes reduces unemployment. Indeed, layoff taxes lead the firms to internalize the effect of dismissals on unemployment costs. So countries which have costly employment protection procedures (as happens in continental Europe) have much to gain in replacing them by firing taxes.
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Bibliographic InfoArticle provided by ENSAE in its journal Annals of Economics and Statistics.
Volume (Year): (2008)
Issue (Month): 89 ()
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- Gavrel, Frédéric & Lebon, Isabelle & Rebière, Thérèse, 2010. "Layoff taxes and minimum wage: Two complementary public policies," Economics Letters, Elsevier, Elsevier, vol. 107(1), pages 30-32, April.
- DeNicco, James, 2013. "Employment-At-Will Exceptions and Jobless Recovery," School of Economics Working Paper Series, LeBow College of Business, Drexel University 2013-1, LeBow College of Business, Drexel University.
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