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Why is the Employment Protection Stricter in Europe than in the US?

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  • Belot, M.V.K.

    (Tilburg University, Center for Economic Research)

Abstract

In this paper, we argue that the reason why the United States prefer a lower level of employment protection than the European countries lies in the differences in gains and costs from geographical mobility.We present a model where labor migration and employment protection are both determined endogenously.The labor market is modeled within a matching framework, where the employment protection reduces both the job finding and firing rates.Countries with low migration costs and high economic heterogeneity may prefer no employment protection so that workers can move quickly to better horizons rather than being maintained in low productive activities.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2001-79.

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Date of creation: 2001
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Handle: RePEc:dgr:kubcen:200179

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  1. Chiara Bentivogli & Patrizio Pagano, 1999. "Regional Disparities and Labour Mobility: the Euro-11 versus the USA," LABOUR, CEIS, vol. 13(3), pages 737-760, 09.
  2. Hassler, John & Mora, José V Rodríguez & Storesletten, Kjetil & Zilibotti, Fabrizio, 2001. "A Positive Theory of Geographic Mobility and Social Insurance," CEPR Discussion Papers 2964, C.E.P.R. Discussion Papers.
  3. Ronald Schettkat, 1997. "Employment Protection and Labour Mobility in Europe: an empirical analysis using the EU's labour force survey," International Review of Applied Economics, Taylor and Francis Journals, vol. 11(1), pages 105-118.
  4. Decressin, Jorg & Fatas, Antonio, 1995. "Regional labor market dynamics in Europe," European Economic Review, Elsevier, vol. 39(9), pages 1627-1655, December.
  5. Alun H. Thomas, 1994. "The Response of Wages and Labor Supply Movements to Employment Shocks Across Europe and the United States," IMF Working Papers 94/158, International Monetary Fund.
  6. Saint-Paul, Gilles, 2000. "The Political Economy of Labour Market Institutions," OUP Catalogue, Oxford University Press, number 9780198293323, September.
  7. Saint-Paul, G., 1996. "The rise and persistence of rigidities," DELTA Working Papers 96-21, DELTA (Ecole normale supérieure).
  8. Hassler, John & Rodriguez Mora, Jose V., 1999. "Employment turnover and the public allocation of unemployment insurance," Journal of Public Economics, Elsevier, vol. 73(1), pages 55-83, July.
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Cited by:
  1. Erol Taymaz & Sule Ozler, 2004. "Labor Market Policies and EU Accession: Problems and Prospects for Turkey," ERC Working Papers 0405, ERC - Economic Research Center, Middle East Technical University, revised Mar 2004.

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