This paper investigates the efficiency implications of two kinds of worker protection, job security and income protection. Both of them have important aggregate efficiency effects in the dynamic labor markets, where worker mobility is costly. In the absense of firing costs, income security has ambiguous effect on production efficiency. If mobility costs are very high, dynamic costs associated to reallocation outweighs a gain from static productive efficiency as more jobs are created into high productivity sector, but need to be reallocated always when the sector is hit by a negative productivity shock. On the contrary, if mobility costs are low, a static efficiency outweighs the dynamic costs associated to reallocation. Employment protection is also more costly in the terms of productive efficiency, more it involves wasted admistrative and red-tape costs for the firms. When both job security and income protection are high, it makes labor markets more rigid and in general reduces the productive efficiency.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. 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.
Publisher Info
Paper provided by Government Institute for Economic Research Finland (VATT) in its series Discussion Papers with number
219.
Length: Date of creation: 31 May 2000 Date of revision: Handle: RePEc:fer:dpaper:219
Contact details of provider: Postal: Arkadiankatu 7, P.O. Box 1279, FI-00101 Helsinki Phone: +358 40 304 5500 Fax: +358 9 4780 2929 Email: Web page: http://www.vatt.fi/ More information through EDIRC
Order Information: Email:
For technical questions regarding this item, or to correct its listing, contact: (Anita Niskanen).
Find related papers by JEL classification: J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings
References listed on IDEAS 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.:
Cited by: (explanations, 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.)