Discrimination and Employment Protection

55 Pages Posted: 30 Sep 2009

See all articles by Steinar Holden

Steinar Holden

University of Oslo - Department of Economics; Norges Bank; CESifo (Center for Economic Studies and Ifo Institute)

Asa Rosen

Stockholm University - Swedish Institute for Social Research (SOFI); University of Oslo

Multiple version iconThere are 2 versions of this paper

Date Written: September 29, 2009

Abstract

We study a search model with employment protection legislation. We show that if the output from the match is uncertain ex ante, there may exist a discriminatory equilibrium where workers with the same productive characteristics are subject to different hiring standards. If a bad match takes place, discriminated workers will use longer time to find another job, prolonging the costly period for the firm. This makes it less profitable for the firms to hire the discriminated workers, thus sustaining discrimination. In contrast to standard models, the existence of employers with a taste for discrimination may make it more profitable to discriminate also for firms without discriminatory preferences.

Keywords: Discrimination, Employment Protection, Hiring Standards

JEL Classification: J70, J60

Suggested Citation

Holden, Steinar and Rosen, Asa and Rosen, Asa, Discrimination and Employment Protection (September 29, 2009). CESifo Working Paper Series No. 2822, Available at SSRN: https://ssrn.com/abstract=1480148 or http://dx.doi.org/10.2139/ssrn.1480148

Steinar Holden (Contact Author)

University of Oslo - Department of Economics ( email )

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Asa Rosen

University of Oslo ( email )

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Stockholm University - Swedish Institute for Social Research (SOFI) ( email )

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