Workers Self-Selection between Workplaces and Employment Protection Legislation
Posted: 4 Mar 2014
Date Written: March 3, 2014
Abstract
This model explains the self-selection of workers between workplaces which differ in the return to workers' skill and the level of job security. Incomplete information in the market enables the reallocation-process in which each worker chooses her best job. The model also clarifies the distortion of the efficiency as a result of providing workers with employment protection legislation (EPL). The simulation results provide some instruments to quantify the self-selection, to estimate the EPL damage in terms of labor productivity, to quantify the tradeoff between job security and the level of the wage, and to measure the effects of policy decisions.
Keywords: Employment Protection Legislation, Labor productivity, Workers' assignment, Workers' self-selection
JEL Classification: J31, J38, J45, J58, J6
Suggested Citation: Suggested Citation