Assessing the Political Viability of Labor Market Reform: The Case of Employment Protection

Universitat Pompeu Fabra Economics WP No. 346

20 Pages Posted: 28 Feb 1999

See all articles by Gilles Saint-Paul

Gilles Saint-Paul

University of Toulouse I - GREMAQ-IDEI; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Date Written: December 1998

Abstract

We analyze the political support for employment protection legislation. Unlike my previous work on the same topic, this paper pays a lot of attention to the role of obsolescence in the growth process. In voting in favor of employment protection, incumbent employees trade off lower living standards (because employment protection maintains workers in less productive activities) against longer job duration. The support for employment protection will then depend on the value of the latter relative to the cost of the former. We highlight two key determinants of this trade-off: first, the workers' bargaining power, and second, the economy's growth rate--more precisely its rate of creative destruction.

JEL Classification: E6, E24, J3, J6

Suggested Citation

Saint-Paul, Gilles, Assessing the Political Viability of Labor Market Reform: The Case of Employment Protection (December 1998). Universitat Pompeu Fabra Economics WP No. 346. Available at SSRN: https://ssrn.com/abstract=145758 or http://dx.doi.org/10.2139/ssrn.145758

Gilles Saint-Paul (Contact Author)

University of Toulouse I - GREMAQ-IDEI ( email )

Manufacture des Tabacs
21 Allees de Brienne
Toulouse, 31000
France
+33 5 6112 8544 (Phone)
+33 5 6122 5563 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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