In the theoretical literature, the effects of employment protection on unemployment are ambiguous. Higher employment protection reduces job creation as well as job destruction. However, in most models, wages are bargained individually between workers and firms. Using a conventional matching model in which a monopoly union sets wages, I show that employment protection can unambiguously increase unemployment. Interestingly, I find that tightening the restrictions on redundancies and dismissals may even increase the probability of dismissal. Copyright 2008 The Author. Journal compilation CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd. 2008.
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Article provided by CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd in its journal LABOUR.
Volume (Year): 22 (2008) Issue (Month): 2 (06) Pages: 271-289 Download reference. The following formats are available: HTML,
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