Employment Protection and Product Market Regulation
Journal
IZA Discussion Papers 880
Type
discussion paper
Date Issued
2003-10
Author(s)
Abstract
Product market regulation and employment protection are highly correlated across OECD countries. Using an augmented model of monopolistic competition we show why in countries with more regulated product markets, incumbent workers prefer to protect jobs relatively more. Product market regulation increases the scope for employment protection because firms can bear the cost of employment protection more easily and still break even. Moreover, product market regulation decreases employment so that the workers' outside option becomes relatively worse. This increases the incentive to protect the job.
Language
English
Keywords
collective dismissal cost
political economy
HSG Classification
contribution to scientific community
HSG Profile Area
SEPS - Economic Policy
Subject(s)
Eprints ID
260256