What are the Short-Run Effects of Increasing Labor Market Flexibility?
48 Pages Posted: 6 Jan 2001
Date Written: December 2000
Abstract
This paper evaluates the short-run effects of introducing labor market flexibility to an economy characterized by large firing taxes. Different reforms are considered: 1) eliminating all firing taxes, 2) introducing flexible new contracts while retaining the firing taxes on workers employed previous to the reform, and 3) introducing temporary contracts. The paper finds that eliminating all firing taxes increases the unemployment rate much more in the short run than in the long run, that introducing new flexible contracts has similar effects as eliminating all firing taxes, and that introducing temporary contracts of short durations can decrease the unemployment rate, but only in the short-run.
JEL Classification: E24, J65, J68
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Aggregate Employment Fluctuations with Microeconomic Asymmetries
-
Employment Changes, the Structure of Adjustment Costs, and Plant Size
By Øivind Anti Nilsen, Kjell G. Salvanes, ...
-
Organizational Flexibility and Employment Dynamics at Young and Old Plants
-
Dynamic Labor Demand with Lumpy and Kinked Adjustment Costs
By Paola Rota