IDEAS home Printed from https://ideas.repec.org/p/zbw/fubsbe/201114.html

Job protection renders minimum wages less harmful

Author

Listed:
  • Schöb, Ronnie
  • Thum, Marcel

Abstract

Individual labour productivities are often unobservable for firms when hiring new workers. Job protection may prevent firms ex post from using information about labour productivities. We show that a binding minimum wage introduced in the presence of job protection will lead to lower unemployment levels than predicted by the standard labour market model with heterogeneous labour and full information.

Suggested Citation

  • Schöb, Ronnie & Thum, Marcel, 2011. "Job protection renders minimum wages less harmful," Discussion Papers 2011/14, Free University Berlin, School of Business & Economics.
    • Handle: RePEc:zbw:fubsbe:201114
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/49920/1/668790776.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Neher, Frank, 2011. "Markets wanted: Expectation overshooting in transition," Discussion Papers 2011/1, Free University Berlin, School of Business & Economics.
    2. Edward P. Lazear, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(3), pages 699-726.
    3. Marco Caliendo & Frank Fossen & Alexander Kritikos, 2014. "Personality characteristics and the decisions to become and stay self-employed," Small Business Economics, Springer, vol. 42(4), pages 787-814, April.
    4. Fossen, Frank M., 2011. "Personal bankcuptcy law, wealth and entrepreneurship - Theory and evidence from the introduction of a 'fresh start'," Discussion Papers 2011/8, Free University Berlin, School of Business & Economics.
    5. Kappler, Marcus & Reisen, Helmut & Schularick, Moritz & Turkisch, Edouard, 2013. "The Macroeconomic Effects of Large Exchange Rate Appreciations," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 24(3), pages 471-494.
    6. Adriana D. Kugler & Gilles Saint-Paul, 2004. "How Do Firing Costs Affect Worker Flows in a World with Adverse Selection?," Journal of Labor Economics, University of Chicago Press, vol. 22(3), pages 553-584, July.
    7. Clemens Hetschko & Andreas Knabe & Ronnie Schöb, 2014. "Changing Identity: Retiring From Unemployment," Economic Journal, Royal Economic Society, vol. 124(575), pages 149-166, March.
    8. John T. Addison & Paulino Teixeira, 2003. "The Economics of Employment Protection," Journal of Labor Research, Transaction Publishers, vol. 24(1), pages 85-129, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Giacomo Corneo, 2013. "A Note on the Taxation of Couples Under Income Uncertainty," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 69(1), pages 129-134, March.
    2. Ahrens, Steffen & Wesselbaum, Dennis, 2009. "On the introduction of firing costs," Kiel Working Papers 1559, Kiel Institute for the World Economy.
    3. Wesselbaum, Dennis, 2009. "Firing costs in a New Keynesian model with endogenous separations," Kiel Working Papers 1550, Kiel Institute for the World Economy.
    4. Amine Samir, 2015. "Reflections On Employment Protection Legislation: An International Comparison," Comparative Economic Research, Sciendo, vol. 18(1), pages 119-130, March.
    5. Hiroko Okudaira, 2009. "The Economic Costs of Court Decisions Concerning Dismissals in Japan: Identification by Judge Transfers," ISER Discussion Paper 0733, Institute of Social and Economic Research, The University of Osaka.
    6. Ulku,Hulya & Muzi,Silvia, 2015. "Labor market regulations and outcomes in Sweden : a comparative analysis of recent trends," Policy Research Working Paper Series 7229, The World Bank.
    7. Holzmann, Robert & Pouget, Yann & Vodopivec, Milan & Weber, Michael, 2011. "Severance pay programs around the world : history, rationale, status, and reforms," Social Protection Discussion Papers and Notes 62726, The World Bank.
    8. von Below, David & Thoursie, Peter Skogman, 2010. "Last in, first out?: Estimating the effect of seniority rules in Sweden," Labour Economics, Elsevier, vol. 17(6), pages 987-997, December.
    9. Kwiatkowski, Eugeniusz & Włodarczyk, Przemysław, . "Wpływ prawnej ochrony zatrudnienia na rynek pracy w warunkach negatywnego szoku ekonomicznego," Gospodarka Narodowa-The Polish Journal of Economics, Szkoła Główna Handlowa w Warszawie / SGH Warsaw School of Economics, vol. 2012(11-12).
    10. Dennis Wesselbaum, 2014. "Firing tax vs severance payments – an unequal comparison," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 41(5), pages 721-736, September.
    11. Clemens Hetschko, 2016. "On the misery of losing self-employment," Small Business Economics, Springer, vol. 47(2), pages 461-478, August.
    12. Galdo, José & Saavedra-Chanduví, Jaime & Chong, Alberto E., 2007. "Informality and Productivity in the Labor Market: Peru 1986 - 2001," IDB Publications (Working Papers) 1958, Inter-American Development Bank.
    13. Eugeniusz Kwiatkowski & Przemysław Włodarczyk, 2012. "Wpływ prawnej ochrony zatrudnienia na rynek pracy w warunkach negatywnego szoku ekonomicznego," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 11-12, pages 1-23.
    14. Ruffo Hernán & Caullo Laura & Capello Marcelo, 2024. "Efectos de una reforma de la indemnización por despido en Argentina," Asociación Argentina de Economía Política: Working Papers 4760, Asociación Argentina de Economía Política.
    15. Jahn, Elke J., 2005. "Wie wirkt der Kündigungsschutz? (What are the effects of employment protection?)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 38(2/3), pages 284-304.
    16. Arias, Omar & Blom, Andreas & Bosch, Mariano & Cunningham, Wendy & Fiszbein, Ariel & Lopez Acevedo, Gladys & Maloney, William & Saavedra, Jaime & Sanchez-Paramo, Carolina & Santamaria, Mauricio & Siga, 2005. "Pending issues in protection, productivity growth, and poverty reduction," Policy Research Working Paper Series 3799, The World Bank.
    17. Jens Suedekum & Peter Ruehmann, 2003. "Severance Payments and Firm–specific Human Capital," LABOUR, CEIS, vol. 17(1), pages 47-62, March.
    18. Kugler, Adriana & Pica, Giovanni, 2008. "Effects of employment protection on worker and job flows: Evidence from the 1990 Italian reform," Labour Economics, Elsevier, vol. 15(1), pages 78-95, February.
    19. Marco Leonardi & Giovanni Pica, 2007. "Employment Protection Legislation and Wages," CSEF Working Papers 175, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    20. Michael Kind, 2015. "A Level Playing Field: An Optimal Weighting Scheme of Dismissal Protection Characteristics," LABOUR, CEIS, vol. 29(1), pages 79-99, March.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • L5 - Industrial Organization - - Regulation and Industrial Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:fubsbe:201114. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/fwfubde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.