Two Tier Reforms of Employment Protection: A Honeymoon Effect?
AbstractLabor market reforms increasing flexibility at the margin have been recently paying out in terms of employment growth. This paper argues that two-tier labor market reforms have a transitional honeymoon, job creating effect. In a dynamic model of labor demand under uncertainty, the paper 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 labor productivity. Based on a variety of firm-level data on Italy in the period 1995-2000, we find evidence of our empirical implications.
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Bibliographic InfoPaper provided by Collegio Carlo Alberto in its series Carlo Alberto Notebooks with number 37.
Length: 33 pages
Date of creation: 2007
Date of revision:
Labour demand; firing costs; employment protection reform.;
Other versions of this item:
- Tito Boeri & Pietro Garibaldi, 2007. "Two Tier Reforms of Employment Protection: a Honeymoon Effect?," Economic Journal, Royal Economic Society, vol. 117(521), pages 357-385, 06.
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
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