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Employment Protection, International Specialization, and Innovation

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Author Info
Gilles Saint Paul

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Abstract

We develop a model to analyse the implications of firing costs on incentives for R&D and international specialization. The Key idea is paying the firing cost, the country with a rigid labor market will tend to produce relatively secure goods, at a late stage of their product life cycle. Under international trade, an international product cycle emerges where, roughly, new goods are first produced in the low firing cost country will specialize in 'secondary innovations', that is, improvements in existing goods, while the low firing cost country will more specialize in 'primary innovation', that is, invention of new goods.

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Publisher Info
Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 256.

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Date of creation: Jan 1996
Date of revision: May 1997
Handle: RePEc:upf:upfgen:256

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Web page: http://www.econ.upf.edu/

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Related research
Keywords: Employment protection; innovation; R&D; international product cycle; labour market flexibility;

Other versions of this item:

Find related papers by JEL classification:
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Private Pensions
O3 - Economic Development, Technological Change, and Growth - - Technological Change

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  1. Bassanini, Andrea & Nunziata, Luca & Venn, Danielle, 2008. "Job Protection Legislation and Productivity Growth in OECD Countries," IZA Discussion Papers 3555, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Berdugo, Binyamin & Hadad, Sharon, 2008. "How Do Firing Costs Affect Innovation and Growth when Workers' Ability is Unknown? – Employment Protection as a Burden on a Firm's Screening Process," MPRA Paper 11410, University Library of Munich, Germany. [Downloadable!]
  3. Koeniger, Winfried, 2002. "Employment Protection, Product Market Competition and Growth," IZA Discussion Papers 554, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Andrea Bassanini & Danielle Venn, 2008. "The Impact of Labour Market Policies on Productivity in OECD Countries," International Productivity Monitor, Centre for the Study of Living Standards, vol. 17, pages 3-15, Fall. [Downloadable!]
  5. Fabiano Schivardi & Roberto Torrini, 2003. "Firm Size Distribution and EPL in Italy," William Davidson Institute Working Papers Series 2003-613, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  6. Fabiano Schivardi & Roberto Torrini, 2004. "Firm size distribution and employment protection legislation in Italy," Temi di discussione (Economic working papers) 504, Bank of Italy, Economic Research Department. [Downloadable!]
  7. George Alessandria - Alain Delacroix, 2004. "Trade and the (Dis)Incentive to Reform Labor Markets: The Case of Reform in the European Union," Econometric Society 2004 North American Summer Meetings 233, Econometric Society. [Downloadable!]
    Other versions:
  8. Barrios, Salvador & Burgelman, Jean-Claude, 2007. "Information and Communication Technologies, Market Rigidities and Growth: Implications for EU Policies," MPRA Paper 5838, University Library of Munich, Germany. [Downloadable!]
  9. Haaland, Jan I. & Wooton, Ian, 2003. "Domestic Labour Markets and Foreign Direct Investment," CEPR Discussion Papers 3989, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  10. Koeniger, Winfried, 2003. "Collective Dismissal Cost, Product Market Competition and Innovation," IZA Discussion Papers 888, Institute for the Study of Labor (IZA). [Downloadable!]
  11. Fabiano Schivardi & Roberto Torrini, 2004. "Threshold Effects and Firm Size: the Case of Firing Costs," CEP Discussion Papers dp0633, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
  12. Paolo Epifani & Gino Gancia, 2002. "Trade, Migration and Regional Unemployment," Economics Working Papers 832, Department of Economics and Business, Universitat Pompeu Fabra, revised Nov 2003. [Downloadable!]
    Other versions:
  13. Norbert Berthold & Rainer Fehn, 2003. "Unemployment in Germany: Reasons and Remedies," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  14. Richard Nahuis & Henry van der Wiel, 2005. "How Should Europe's ICT Ambitions look like? An Interpretative Review of the Facts," Working Papers 05-22, Utrecht School of Economics. [Downloadable!]
  15. Andrea Vindigni, 2002. "Uncertainty and the Politics of Employment Protection," Working Papers 844, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  16. José Enrique Galdón Sánchez, 2001. "Employment protection legislation and the IT-sector in OECD countries," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 0115, Departamento de Economía - Universidad Pública de Navarra. [Downloadable!]
    Other versions:
  17. Markus Poschke, 2007. "Employment Protection, Firm Selection, and Growth," IZA Discussion Papers 3164, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  18. Thierry Tressel, 2008. "Does Technological Diffusion Explain Australia's Productivity Performance?," IMF Working Papers 08/4, International Monetary Fund. [Downloadable!]
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