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Employment protection and product market regulation

Koeniger, Winfried and Vindigni, Andrea Employment protection and product market regulation. Discussion Paper #880/2003 IZA Discussion paper

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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.

Item Type: Working Paper (Discussion Paper)
Uncontrolled Keywords: Keywords: collective dismissal cost, political economy - JEL Classification: J63, J65, L16
Subjects: H Social Sciences > HB Economic Theory
Research Area: Economics and Institutional Change
Depositing User: Ms T. Iannizzi
Date Deposited: 30 Jun 2014 08:32
Last Modified: 30 Jun 2014 08:32
URI: http://eprints.imtlucca.it/id/eprint/2216

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