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| Author: | Heijdra, B. J. Ligthart, J. E. |
| Title: | Deposit-refund on labor: a solution to equilibrium unemployment? |
| Journal: | IMF Staff papers
2001 : VOL. 48:3, p. 593-609 |
| Index terms: | Labour markets Employment Unemployment |
| Language: | eng |
| Abstract: | The paper studies the employment effects of a deposit-refund scheme on labor in a simple seach-theoretic model of the labor market. It is shown that if a firm pays a deposit when it fires a worker, to be refunded when it employs the same or another worker, the vacancy rate increases and the unemployment rate declines. The scheme introduces rigidities in the labor market, however, which may be undesirable in countries wanting to liberalize their labour market. |
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