Two Tier Reforms of Employment Protection: a Honeymoon Effect?
AbstractLabour market reforms increasing flexibility 'at the margin' have been recently paying out in terms of employment growth. This article argues that two-tier labour market reforms have a transitional 'honeymoon', job creating effect. In a dynamic model of labour demand under uncertainty, the article predicts that in the aftermath of reforms, beyond an increase in employment, there should be a reduction in 'employment inaction' and in the mean and cross-sectional variance of labour productivity. Based on a variety of firm-level data on Italy in the period 1995-2000, we find evidence of our empirical implications. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007.
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Bibliographic InfoArticle provided by Royal Economic Society in its journal The Economic Journal.
Volume (Year): 117 (2007)
Issue (Month): 521 (06)
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Other versions of this item:
- Tito Boeri & Pietro Garibaldi, 2007. "Two Tier Reforms of Employment Protection: A Honeymoon Effect?," Carlo Alberto Notebooks 37, Collegio Carlo Alberto.
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
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