Autori: Berdugo, Binyamin , Hadad, Sharon
Titolo: How do firing costs affect innovation and growth when workers' ability is unknown? Employment protection as a burden on a firm's screening process
Periodico: European Journal of Comparative Economics
Anno: 2012 - Volume: 9 - Fascicolo: 1 - Pagina iniziale: 3 - Pagina finale: 11

This paper analyzes the implication of employment protection legislation on a firm's screening process. We present a model in which human-capital-intensive firms (high-tech firms) with imperfect information about their workers' type attempt during a trial period to identify those incompetent workers they will subsequently dismiss. However, employment protection measures place a burden on this screening process thereby motivating innovators to embark on medium-tech projects which are more flexible in their human capital requirements. As such, employment protection legislation distorts the pattern of specialization in favor of medium-tech firms over high-tech firms and consequently slows down the process of economic growth. The results of the paper are consistent with documented data on Europe versus US productivity growth and specialization patterns.


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SICI: 1824-2979(2012)9:1<3:HDFCAI>2.0.ZU;2-A
Testo completo: http://eaces.liuc.it/Default.asp?tipo=articles&identifier=ejce:18242979/2012/01/01

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