Cross-skill Redistribution and the Tradeoff between Unemployment Benefits and Employment Protection
AbstractWe document the presence of a trade-o. between unemployment benefits (UB) and employment protection legislation (EPL) in the provision of insurance against labor market risk. Di.erent countries’ locations along this trade-o. represent stable, hard to modify, politico-economic equilibria. We develop a model in which voters are required to cast a ballot over the strictness of EPL, the generosity of UBs and the amount of redistribution involved by the financing of unemployment Insurance. Agents are heterogeneous along two dimensions: employment status — insiders and outsiders — and skills — low and high. Unlike previous work on EPL, we model employment protection as an institution redistributing among insiders, notably in favour of the low-skill workers. A key implication of the model is that configurations with strict EPL and low UB should emerge in presence of compressed wage structures. Micro data on wage premia on educational attainments and on the strictness of EPL are in line with our results. We also find empirical support to the substantive assumptions of the model on the e.ects of EPL.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by FEDEA in its series Working Papers with number 2004-26.
Date of creation:
Date of revision:
Contact details of provider:
Web page: http://www.fedea.net
Other versions of this item:
- Tito Boeri & Ignacio Conde-Ruiz & Vincenzo Galasso, 2004. "Cross-skill Redistribution and the Tradeoff between Unemployment Benefits and Employment Protection," Working Papers 271, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Boeri, Tito & Conde-Ruiz, José Ignacio & Galasso, Vincenzo, 2004. "Cross-Skill Redistribution and the Trade-Off Between Unemployment Benefits and Employment Protection," CEPR Discussion Papers 4711, C.E.P.R. Discussion Papers.
- Boeri, Tito & Conde-Ruiz, J. Ignacio & Galasso, Vincenzo, 2004. "Cross-Skill Redistribution and the Tradeoff between Unemployment Benefits and Employment Protection," IZA Discussion Papers 1371, Institute for the Study of Labor (IZA).
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
- J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-03-20 (All new papers)
- NEP-DGE-2005-03-20 (Dynamic General Equilibrium)
- NEP-EDU-2005-03-20 (Education)
- NEP-LAB-2005-03-20 (Labour Economics)
- NEP-POL-2005-03-20 (Positive Political Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Conde-Ruiz, Jose Ignacio & Galasso, Vincenzo, 2005.
"Positive arithmetic of the welfare state,"
Journal of Public Economics,
Elsevier, vol. 89(5-6), pages 933-955, June.
- Conde-Ruiz, José Ignacio & Galasso, Vincenzo, 1999. "Positive Arithmetic of the Welfare State," CEPR Discussion Papers 2202, C.E.P.R. Discussion Papers.
- Conde-Ruiz, J.I. & Galasso, V., 2000. "Positive Arithmetic of the Welfare State," Economics Working Papers eco2000/23, European University Institute.
- repec:ner:carlos:info:hdl:10016/3309 is not listed on IDEAS
- Saint-Paul, Gilles, 1999.
"Assessing the Political Viability of Labour Market Reform: The Case of Employment Protection,"
CEPR Discussion Papers
2136, C.E.P.R. Discussion Papers.
- Gilles Saint-Paul, 1999. "Assessing the political viability of labor market reform : the case of employment protection," Review, Federal Reserve Bank of St. Louis, issue May, pages 73-87.
- Gilles Saint Paul, 1998. "Assesing the political viability of labour market reform: The case of employment protection," Economics Working Papers 346, Department of Economics and Business, Universitat Pompeu Fabra.
- Daron Acemoglu & Robert Shimer, 1999.
"Productivity Gains from Unemployment Insurance,"
99-29, Massachusetts Institute of Technology (MIT), Department of Economics.
- Acemoglu, Daron & Aghion, Philippe & Violante, Giovanni L., 2001.
"Deunionization, technical change and inequality,"
Carnegie-Rochester Conference Series on Public Policy,
Elsevier, vol. 55(1), pages 229-264, December.
- Giuseppe Bertola & Richard Rogerson, 1996.
"Institutions and Labor Reallocation,"
NBER Working Papers
5828, National Bureau of Economic Research, Inc.
- Gilles Saint-Paul, 2002.
"The Political Economy of Employment Protection,"
Journal of Political Economy,
University of Chicago Press, vol. 110(3), pages 672-701, June.
- Saint-Paul, Gilles, 1999. "The Political Economy of Employment Protection," CEPR Discussion Papers 2109, C.E.P.R. Discussion Papers.
- Gilles Saint Paul, 1999. "The political economy of employment protection," Economics Working Papers 355, Department of Economics and Business, Universitat Pompeu Fabra.
- Ljungqvist, Lars & Sargent, Thomas J, 2002. "The European Employment Experience," CEPR Discussion Papers 3543, C.E.P.R. Discussion Papers.
- J. Ignacio Conde-Ruiz & Vincenzo Galasso, 2003.
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 6(1), pages 12-36, January.
- Boeri, Tito, 1999.
"Enforcement of employment security regulations, on-the-job search and unemployment duration,"
European Economic Review,
Elsevier, vol. 43(1), pages 65-89, January.
- Boeri, Tito, 1998. "Enforcement of Employment Security Regulations, On-The-Job Search and Unemployment Duration," CEPR Discussion Papers 1850, C.E.P.R. Discussion Papers.
- Tito Boeri & Axel Börsch-Supan & Guido Tabellini, 2001. "Would you like to shrink the welfare state? A survey of European citizens," Economic Policy, CEPR & CES & MSH, vol. 16(32), pages 7-50, 04.
- Mortensen, Dale T & Pissarides, Christopher A, 1999. "Unemployment Responses to 'Skill-Biased' Technology Shocks: The Role of Labour Market Policy," Economic Journal, Royal Economic Society, vol. 109(455), pages 242-65, April.
- Lazear, Edward P, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, MIT Press, vol. 105(3), pages 699-726, August.
- André Sapir & Marco Buti, 1998. "Economic policy in EMU," ULB Institutional Repository 2013/8078, ULB -- Universite Libre de Bruxelles.
- Pissarides, Christopher A., 2001. "Employment protection," Labour Economics, Elsevier, vol. 8(2), pages 131-159, May.
- J. Ignacio Conde-Ruiz & Vincenzo Galasso, . "Early retirement," Working Papers 2003-03, FEDEA.
- Torsten Persson & Guido Tabellini, 2002. "Political Economics: Explaining Economic Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661314.
- Bentolila, Samuel & Bertola, Giuseppe, 1990. "Firing Costs and Labour Demand: How Bad Is Eurosclerosis?," Review of Economic Studies, Wiley Blackwell, vol. 57(3), pages 381-402, July.
- J. Ignacio Conde-Ruiz & Vincenzo Galasso, . "Positive Arithmetic of the Welfare State," Working Papers 2003-04, FEDEA.
- Bertola, Giuseppe, 1990. "Job security, employment and wages," European Economic Review, Elsevier, vol. 34(4), pages 851-879, June.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Carmen Arias).
If references are entirely missing, you can add them using this form.