%0 Journal Article
%@ 0734-306X
%A Vindigni, Andrea
%A Scotti, Simone
%A Tealdi, Cristina
%D 2015
%F eprints:2577
%I University of Chicago Press
%J Journal of Labor Economics
%K Labor-market flexibility; Equilibrium unemployment; Severance payments; Firing costs; Job security; Turnover; Wage; Economy; Institutions; Persistence
%N 1
%P 209-267
%T Uncertainty and the politics of employment protection
%U http://eprints.imtlucca.it/2577/
%V 33
%X 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.