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Unemployment and employment protection in a unionized economy with search frictions

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Author Info
Stähler, Nikolai

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Abstract

In theoretical literature, the effects of employment protection on unemployment are ambiguous. Higher employment protection decreases job creation as well as job destruction. However, in most models, wages are bargained individually between workers and firms. Using a conventional matching model in which a monopoly union sets wages, I show that employment protection can unambiguously increase unemployment. Interestingly, I find that tightening the restrictions on redundancies and dismissals may even increase the probability of dismissal. --

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Publisher Info
Paper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 1: Economic Studies with number 2007,04.

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Date of creation: 2007
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Handle: RePEc:zbw:bubdp1:5558

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Related research
Keywords: employment protection; search and matching models; unemployment; unions;

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Find related papers by JEL classification:
J68 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Public Policy
J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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  1. Moser, Christoph & Stähler, Nikolai, 2009. "Spillover effects of minimum wages in a two-sector search model," Discussion Paper Series 1: Economic Studies 2009,01, Deutsche Bundesbank, Research Centre. [Downloadable!]
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This page was last updated on 2009-12-2.

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