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Efficiency-enhancing role of mandatory leave policy in a search-theoretic model of the labor market

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  • Miyazaki, Koichi

Abstract

Workers temporarily leave their jobs for various reasons, for example, maternity, caregiving, and illness. In such a situation, a firm can lay off these workers and search for a new worker. To protect workers from such a firm's behavior, many developed countries have implemented a mandatory leave policy. The goal of this study was to rationalize such a government intervention in the labor market from an efficiency perspective. To achieve this objective, this study constructed a search-theoretic model of the labor market and analyzed a steady-state equilibrium in the model. The results demonstrated that introducing a mandatory leave policy increases efficiency under certain conditions. This result justifies such government interventions in the labor market from an efficiency perspective.

Suggested Citation

  • Miyazaki, Koichi, 2023. "Efficiency-enhancing role of mandatory leave policy in a search-theoretic model of the labor market," MPRA Paper 116614, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:116614
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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