We consider a model in which the labor market is characterized by search frictions and there is monopolistic competition in the goods market. We introduce proportional income taxation and unemployment benefits with Government balanced budget constraint. Then, we evaluate the effects of both more...

Empirical evidence suggests the existence of a negative relationship between rigidities on the labor market and the level of economic activity. In this paper, we provide a background of this evidence. We build a model where the employed worker chooses the optimal level of firing costs by...

In this paper we present a theoretical model in which employment protection legislation (EPL) evolves over time and space as labour market conditions change. The basic hypothesis around which the model is built is that when it is easy for workers to find a new job, the strictness of EPL is...

We address theoretically and empirically the impact of R&D and innovation activity (IA) on the use of external numerical flexibility (ENF). We build a firm-sided model showing that a first-order stochastic dominance shift in the productivity distribution function decreases the probability of...

<i> Politiche del lavoro ed esternalità di ricerca </i> (di Riccardo Tilli) - ABSTRACT: This paper focuses on both qualitative and quantitative effects of five policy instruments (firing tax, hiring subsidies, taxation, unemployment benefits and tax structure) in a search and matching model with...

We explore the macroeconomic implications of the inverse relationship between firing costs and labor market tightness, evaluating its effects on labor market performance in a matching model `a la Mortensen and Pissarides (1994). Results are clear cut and generalizes our previous work. First,...

We study the impact of R&D and innovation on the use of external numerical flexibility (ENF). R&D and innovation imply both a higher average and a higher volatile productivity. We investigate this ambiguous effect on the firm preference for using ENF in two steps. First, we use a simple model to...

We provide a theoretical microfoundation for the negative relationship between firing costs and labor market tightness and its effects on labor market performance. The optimal level of firing costs is chosen by the employed worker i.e. the insider by maximizing her human capital. Performing a...