Dual Employment Protection Legislation: A Framework for Analysis

Juan Dolado, Juan F Jimeno () and Marcel Jansen

No 5033, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In many countries, Employment Protection Legislation (EPL) establishes different regulations for certain groups of workers who face more disadvantages in the labour market (young workers, women, unskilled workers, etc.) with the aim of improving their employability. Well-known examples are the introduction of atypical employment contracts (e.g. temporary and determined-duration contracts), which ease firing restrictions for some, but not all, workers. This paper discusses the effects of EPL varying among workers of different skills on the level and composition of unemployment, job flows, productivity and welfare. By using an extension of Mortensen-Pissarides? (1994) search model where heterogeneous workers compete for the same jobs, we are able to identify several key channels through which changing firing costs for some groups of workers affects hiring and firing of all workers and, hence, may have a different impact on aggregate labour market variables than reducing firing costs across the board. Some analytical and simulation results also show that these effects of differentiated firing costs by workers? skills may be different depending upon the initial state of the labour market.

Keywords: Firing costs; Unemployment; Matching (search for similar items in EconPapers)
JEL-codes: J63 J64 (search for similar items in EconPapers)
Date: 2005-05
New Economics Papers: this item is included in nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

Downloads: (external link)
https://cepr.org/publications/DP5033 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Dual employment protection legislation: a framework for analysis (2005)
Working Paper: Dual Employment Protection Legislation: A Framework for Analysis (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:5033

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP5033

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().