DP3396 Welfare Effects of Employment Protection
|Author(s):||Michèle Belot, Jan Boone, Jan C. van Ours|
|Publication Date:||May 2002|
|Keyword(s):||employment protection, hold-up, human capital, reforms, welfare|
|JEL(s):||J41, J63, J68|
|Programme Areas:||Labour Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=3396|
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.