Pierre Cahuc () (Université de Paris, EUREQua, CEPREMAP, CREST-INSEE, IZA and Institut Universitaire de France) André Zylberberg (CNRS, EUREQua, Université de Paris)
Additional information is available for the following
registered author(s):
We analyze how wage setting institutions and job-security provisions interact on unemployment. The assumption that wages are renegotiated by mutual agreement only is introduced in a matching model with endogenous job destruction à la Mortensen and Pissarides (1994) in order to get wage profiles with proper microfoundations. Then, it is shown that job protection policies influence the wage distribution and that government mandated severance transfers from employers to workers are not any more neutral, as in the standard matching model where wages are continuously renegotiated: In our framework high redundancy transfers influence employment. Moreover, the assumption of renegotiation by mutual agreement allows us to introduce a minimum wage in a coherent way, and to study its interactions with job protection policies. Our computational exercises suggest that redundancy transfers and administrative dismissal restrictions have negligeable unemployment effects when wages are flexible or when the minimum wage is low, but a dramatic positive impact on unemployment when there is a high minimum wage.
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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number
95.
Find related papers by JEL classification: H29 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
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.)
Isabelle Méjean & Lise Patureau, 2008.
"Location decisions and Minimum Wages,"
THEMA Working Papers
2008-06, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
[Downloadable!]
Other versions:
Did you know? You can import bibliographic info in various formats into you bibliographic tool, or just into your word processor. See under "publisher info" on each abstract page.