How Does Employment Protection Legislation Affect Unemployment in Tunisia? A Search Equilibrium Approach
IMF Working Papers, May 1, 2005
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- How Does Employment Protection Legislation Affect Unemployment in Tunisia? A Search Equilibrium Approach
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Bibliographic details
- Authors: Domenico Fanizza, Taline Koranchelian
- Published: May 1, 2005
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451861112.001
Summary
- The paper applies a search matching model with firing restrictions to examine whether the existence of firing restrictions affects the outcome of the matching process and the natural rate of unemployment in Tunisia.
- Conclusion: the removal of firing restrictions is likely to produce a favorable but limited impact on unemployment in Tunisia.
Major findings and analysis
- Methodology: use of a search matching model with firing restrictions to study effects on matching outcomes and equilibrium unemployment.
- Key conclusion: firing restrictions have an effect on the matching process and the natural rate of unemployment, but eliminating those restrictions yields only a limited reduction in unemployment in Tunisia.
Policy implications and recommendations
- Removing firing restrictions can be expected to produce a favorable impact on unemployment, but policymakers should anticipate the impact to be limited rather than large.
- The limited magnitude of the effect implies that complementary policies may be needed to achieve substantial reductions in unemployment.