The political economy of employment protection

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• dc.contributor.author Saint Paul, Gillesca
• dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
• dc.date.accessioned 2017-07-26T10:50:21Z
• dc.date.available 2017-07-26T10:50:21Z
• dc.date.issued 1999-01-01
• dc.date.modified 2017-07-23T02:04:18Z
• dc.description.abstract This paper develops a model of job creation and job destruction in a growing economy with embodied technical progress, that we use to analyze the political support for employment protection legislations such as the ones that are observed in most European countries. We analyze the possibility of Condorcet cycles due to the fact that workers about to become unemployed prefer both an increase and a reduction in firing costs over the status quo. Despite this problem, we show the existence of local, and sometimes global majority winners. In voting in favour of employment protection, incumbent employees trade off lower living standards (because employment protection maintains workers in less productive activities) against longer job duration. We show that the gains from, and consequently the political support for employment protection (as defined by maximunjob tenure) are larger, the lower the rate of creative destruction and the larger the worker's bargaining power. Numerical simulations suggest a hump- shaped response of firing costs to these variables, as well as negative impact of exogeneous turnover on employment protection.
• dc.format.mimetype application/pdfca
• dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=355
• dc.identifier.citation Journal of Political Economy, University of Chicago Press, vol. 110(3), pp. 672-701, June 2002
• dc.identifier.uri http://hdl.handle.net/10230/354
• dc.language.iso eng
• dc.relation.ispartofseries Economics and Business Working Papers Series; 355
• dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
• dc.subject.keyword vintage capital
• dc.subject.keyword obsolescence
• dc.subject.keyword political economy
• dc.subject.keyword firing costs
• dc.subject.keyword creative destruction
• dc.subject.keyword Macroeconomics and International Economics
• dc.title The political economy of employment protectionca
• dc.type info:eu-repo/semantics/workingPaper