Assesing the political viability of labour market reform: The case of employment protection

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: We analyze the political support for employment protection legislation. Unlike my previous work on the same topic, this paper pays a lot of attention to the role of obsolescence in the growth process. 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. The support for employment protection will then depend on the value of the latter relative to the cost of the former. We highlight two key deeterminants of this trade-off: first, the workers' bargaining power, second, the economy's growth rate-more precisely its rate of creative destruction.

Keywords: Vintage capital; obsolescence; political economy; firing costs; creative destruction (search for similar items in EconPapers)
JEL-codes: E24 E6 J3 J6 (search for similar items in EconPapers)
Date: 1998-12
New Economics Papers: this item is included in nep-ltv, nep-pke and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Assessing the political viability of labor market reform: the case of employment protection (1999)
Working Paper: Assessing the Political Viability of Labour Market Reform: The Case of Employment Protection (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:346

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