Credit Markets and Employment Protection: Towards a New Political Economy of Labor Market Reform∗
نویسندگان
چکیده
We build a simple model to show why the unemployed vote for employment protection. An unemployed individual who nds a job might face a credit constraint: the bank fears that the individual might lose his job and not repay the loan. Credit constraints for newly employed individuals become more severe as employment protection decreases. A decrease in employment protection also increases expected income. The unemployed might prefer the steady state without employment protection to the steady state with employment protection, but will not vote for liberalization, as the transition phase, where credit constraints are strongest, gives them a net loss. ∗This research is nancially supported by the National Bank of Belgium. The rst author thanks Brussels Airlines for the smooth background noise in its Avro-RJ85 that allowed for concentration while working on this draft. The second author would like to thank Café Belga and Pain Quotidien for their excellent research environment. †[email protected] ‡[email protected]
منابع مشابه
Dynamic Labor Market in a Dynamic Stochastic General Equilibrium Model: Case Study of Iranian Economy
The labor market, as one of the four markets, plays an important role in economic growth and development. So review developments in the labor market because of its close relationship with developments in other sectors is of great importance. This study tries to examine the dynamics of the labor market by adjusting for a New Keynesian dynamic stochastic general equilibrium model for the Iranian ...
متن کاملAssessing the Political Viability of Labor Market Reform. The Case of Employment Protection
T here is somewhat of a consensus among economists that labor market rigidities are responsible for high unemployment in Europe, and in particular for its most alarming aspects such as its long duration and high incidence on youth. Unemployment benefits lower the incentive for job search and increase wage pressure by insiders. Minimum wages price the least skilled out of the market. Firing cost...
متن کاملAssessing the political viability of labour market reform: the case of employment protection
متن کامل
INTERNATIONAL IMMIGRATION AND ITS ECONOMIC IMPACT ON THE LABOR MARKET IN HOST COUNTRIES
According to the latest census conducted by the United Nations, currently about 213 million people, i.e. more than 3 percent of the world's population, live outside the country of their birth. The great mobility of the population has definitely different effects on host countries’ economy. The labor market along with commodity, capital and money markets as one of the main pillars of the e...
متن کاملLinkages and Rural Non-Farm Employment Creation: Changing Challenges and Policies in Indonesia
Increasing problems of rural unemployment in Indonesia are at the core of this report. Numbers of unemployed increased dramatically after the 1997 economic crisis and millions of people searched to be reabsorbed in rural labour markets. Agricultural land is scarce, however, and entry barriers are often high in non-farm businesses. Access to capital and information is limited for the rural poor ...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
عنوان ژورنال:
دوره شماره
صفحات -
تاریخ انتشار 2010