Discussion Paper Details

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Title: Welfare Effects of Employment Protection

Author(s): Michèle Belot, Jan Boone and Jan C. van Ours

Publication Date: May 2002

Keyword(s): employment protection, hold-up, human capital, reforms and welfare

Programme Area(s): Labour Economics

Abstract: Employment protection is often related to costs incurred by firms when they fire a worker. The stability of the employment relationship, enhanced by employment protection, is also favourable to the productivity of the job. We analyse employment protection focusing on this trade-off between adjustment costs and productivity. We show that from a welfare point of view there is an optimal degree of employment protection.

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Bibliographic Reference

Belot, M, Boone, J and van Ours, J. 2002. 'Welfare Effects of Employment Protection'. London, Centre for Economic Policy Research.