Reforming labor market institutions
Subtitle: unemployment insurance and employment protection
By: Olivier Blanchard
Contributors: Massachusetts Institute of Technology. Dept. of Economics
Series: Working paper series / Massachusetts Institute of Technology, Dept. of Economics -- working paper 04-38; Working paper (Massachusetts Institute of Technology. Dept. of Economics) -- no. 04-38.
Publisher: Massachusetts Institute of Technology, Dept. of Economics
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Number of pages: 28
Description: This paper explores the characteristics of both optimal and actual unemployment insurance and employment protection. It then sketches potential paths for reforms in both rich and middle-income countries. It reaches three main conclusions:There is a role for both state-provided unemployment insurance and employment protection.In rich countries, one challenge is to combine unemployment insurance with strong incentives for the unemployed to take jobs. Financial incentives are unlikely to be enough at the low end of the wage scale. The other challenge is to redefine employment protection by reducing administrative constraints and judicial intervention, and relying more on financial incentives.In middle-income countries, the main challenge is to move from the current system of high severance payments and employment protection to a system of state-provided unemployment benefits and lower severance payments. Keywords: Unemployment insurance, Employment protection, unemployment benefits, layoff taxes, layoffs, severance payments, informal sector. JEL Classifications: D60, E62, H21, J30, J32, J38, J65.
Notes: "November 10, 2004."

Includes bibliographical references (p. 28).

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