Journal of Labor Economics Vol. 33 No. 1 2015
Uncertainty and the Politics of Employment Protection
Abstract
This paper investigates social preferences over employment protection regulation in a general equilibrium model of dynamic labor demand and sheds some light on the comparative dynamics of Eurosclerosis. When firing costs are low, a transition to a rigid labor market is favored by all the employed workers with idiosyncratic productivity below some threshold; when their status quo level is high, preserving a rigid labor market is favored only by the employed with intermediate productivity. A more volatile environment and a lower rate of productivity growth increase the political support for labor market rigidity only in high-rents economies.
- DOI
- 10.1086/678306
- Volume
- 33
- Issue
- 1
- Pages
- 209-267
- Language
- en
- Sources
- openalex crossref