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A Positive Analysis of Targeted Employment Protection Legislation

Listed author(s):
  • Dolado Juan

    ()

    (Universidad Carlos III)

  • Jansen Marcel

    ()

    (Universidad Carlos III)

  • Jimeno Serrano Juan

    ()

    (Banco de España)

In many countries, Employment Protection Legislation (EPL) establishes less strict dismissal procedures for specific groups of workers. This paper builds a simple matching model with heterogeneous workers in order to analyze this feature of EPL. We use the model to analyze the effects of reforms targeted at lowering the firing costs of a particular group of workers, and compare the results with those stemming from a comprehensive reform that reduces firing costs for all workers. The model is calibrated for the Spanish economy, where an important reform of this kind took place in 1997. Overall, our results point out that EPL reforms achieve the largest reduction in unemployment when they are targeted to workers with lower and more volatile productivity.

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Article provided by De Gruyter in its journal The B.E. Journal of Macroeconomics.

Volume (Year): 7 (2007)
Issue (Month): 1 (July)
Pages: 1-30

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Handle: RePEc:bpj:bejmac:v:7:y:2007:i:1:n:14
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  1. David Naumark & William Wascher, 2003. "Minimum wages, labor market institutions, and youth employment: a cross-national analysis," Finance and Economics Discussion Series 2003-23, Board of Governors of the Federal Reserve System (U.S.).
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  9. Hugo A. Hopenhayn, 2001. "Labor Market Policies and Employment Duration: The Effects of Labor Market Reform in Argentina," Research Department Publications 3106, Inter-American Development Bank, Research Department.
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  13. Juan F. Jimeno & Diego Rodríguez-Palenzuela, "undated". "Youth unemployment in the OECD: Demographic shifts, labour market institutions, and macroeconomic shocks," Working Papers 2002-15, FEDEA.
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