We document the presence of a trade-off in the labor market between the protection of jobs and the support offered to unemployed people. Different countries' locations along this trade-off represent stable politico-economic equilibria. We develop a model in which individuals determine the mix of job protection and support to the unemployed in a political environment. Agents are heterogeneous along two dimensions: employment status -- insiders and outsiders -- and skills -- low and high. Unlike previous work on the political economy of labor market institutions, we emphasize the role of job protection and unemployment benefits in the wage setting process. A key implication of the model is that flexicurity configurations with low job protection and high support to the unemployed should emerge in presence of a highly educated workforce. Panel regressions of countries' locations along this institutional tradeoff are consistent with the implications of our model.

The political economy of flexicurity

BOERI, TITO MICHELE;GALASSO, VINCENZO
2012

Abstract

We document the presence of a trade-off in the labor market between the protection of jobs and the support offered to unemployed people. Different countries' locations along this trade-off represent stable politico-economic equilibria. We develop a model in which individuals determine the mix of job protection and support to the unemployed in a political environment. Agents are heterogeneous along two dimensions: employment status -- insiders and outsiders -- and skills -- low and high. Unlike previous work on the political economy of labor market institutions, we emphasize the role of job protection and unemployment benefits in the wage setting process. A key implication of the model is that flexicurity configurations with low job protection and high support to the unemployed should emerge in presence of a highly educated workforce. Panel regressions of countries' locations along this institutional tradeoff are consistent with the implications of our model.
2012
Boeri, TITO MICHELE; J. I., Conde Ruiz; Galasso, Vincenzo
File in questo prodotto:
Non ci sono file associati a questo prodotto.

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11565/3717463
 Attenzione

Attenzione! I dati visualizzati non sono stati sottoposti a validazione da parte dell'ateneo

Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 43
  • ???jsp.display-item.citation.isi??? 38
social impact