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Welfare Effects of Employment Protection

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  • Belot, Michèle
  • Boone, Jan
  • van Ours, Jan C

Abstract

Employment protection is often related to costs incurred by firms when they fire a worker. The stability of the employment relationship, enhanced by employment protection, is also favourable to the productivity of the job. We analyse employment protection focusing on this trade-off between adjustment costs and productivity. We show that from a welfare point of view there is an optimal degree of employment protection.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3396.

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Date of creation: May 2002
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Handle: RePEc:cpr:ceprdp:3396

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Keywords: employment protection; hold-up; human capital; reforms; welfare;

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References

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