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Two Tier Reforms of Employment Protection: a Honeymoon Effect
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Journal Article
Two Tier Reforms of Employment Protection: a Honeymoon Effect
2007
Overview
Labour market reforms increasing flexibility 'at the margin' have been recently paying out in terms of employment growth. This article argues that two-tier labour market reforms have a transitional 'honeymoon', job creating effect. In a dynamic model of labour demand under uncertainty, the article predicts that in the aftermath of reforms, beyond an increase in employment, there should be a reduction in 'employment inaction' and in the mean and cross-sectional variance of labour productivity. Based on a variety of firm-level data on Italy in the period 1995-2000, we find evidence of our empirical implications.
Publisher
Oxford, UK : Blackwell Publishing Ltd,Blackwell Publishing Ltd,Blackwell Publishing,Oxford University Press
Subject
