Please use this identifier to cite or link to this item: http://hdl.handle.net/1822/17762

TitleEmployment protection and unemployment benefits : on technology adoption and job creation in a matching model
Author(s)Lommerud, Kjell Erik
Straume, Odd Rune
Vagstad, Steinar
KeywordsTechnology adoption
Job creation
Employment protection
Unemployment insurance
Issue dateMar-2012
PublisherUniversidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE)
Abstract(s)We analyse the effects of different labour market policies - employment protection, unemployment benefits and payroll taxes - on job creation and technology choices in a model where firms are randomly matched with workers of different productivity and wages are determined by ex-post bargaining. In this setting, unemployment benefits are unambiguously detrimental both to job creation and technology adoption while the effects of employment protection are mixed, as higher firing costs stifle job creation but stimulate technology investments. This suggests that a 'flexicurity' policy, with low employment protection and high unemployment benefits, might have the adverse effect of slowing down technological progress and job growth. Indeed, our analysis of the optimal policy solution suggests that flexicurity is often not optimal, and may be optimal only in conjunction with payroll subsidies.
TypeWorking paper
URIhttp://hdl.handle.net/1822/17762
Peer-Reviewedno
AccessOpen access
Appears in Collections:NIPE - Documentos de Trabalho

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