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Job Protection, Housing Market Regulation and the Youth

Abstract : Young Europeans experience high unemployment rates, job instability, and late emancipation. Meanwhile, they do not support reforms weakening protection on long-term contracts. In this paper, we suggest a possible rationale for such reform distaste. When the rental market is strongly regulated, landlords screen applicants with regard to their ability to pay the rent. Protecting regular jobs offers a second-best technology to sort workers, thereby increasing the rental market size. We provide a model where nonemployed workers demand protected jobs despite unemployment and the share of short-term jobs increases, whereas the individual risk of dismissal is unaffected. Our theory can be extended to alternative risks and markets involving correlated risks and commitment under imperfect information.
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Submitted on : Thursday, May 7, 2020 - 4:54:36 PM
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Antoine Bonleu, Bruno Decreuse, Tanguy van Ypersele. Job Protection, Housing Market Regulation and the Youth. Journal of Public Economic Theory, Wiley, 2019, 21 (6), pp.1017-1036. ⟨halshs-02566548⟩

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