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Moving Towards a Single Labor Contract: Transition vs. Steady State

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  • Siassi, Nawid
  • Dolado, Juan J.
  • Lalé, Etienne

Abstract

This paper analyzes the optimal design of a single open-ended contract (SOEC) and studies the political economy of moving towards such a SOEC in a dual labour market. We compare two economic environments: one with flexible entry-level jobs and high employment protection at long tenure, and another with a SOEC featuring employment protection levels that increase smoothly with tenure. For illustrative purposes, we specialize the discussion of such choices to Spain. A SOEC has the potential of bringing big time efficiency and welfare gains in a steady-state sense. We also identify winners and losers in the transitional path of such a reform and analyze its political support.

Suggested Citation

  • Siassi, Nawid & Dolado, Juan J. & Lalé, Etienne, 2015. "Moving Towards a Single Labor Contract: Transition vs. Steady State," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112858, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc15:112858
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    References listed on IDEAS

    as
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    JEL classification:

    • H29 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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