This paper derives new results on the welfare effects of employment protection. Using data from 17 OECD countries, we show that there exists an inverse U-shape relationship between employment protection and economic growth. Using a simple theoretical model with non-contractible specific...

A cash limit is a fixed amount of money available for pay prior to the wage negotiations in the public sector. This paper examines the macroeconomic implications of cash limits in a unionized economy with decentralized wage bargaining in both private and public sectors. The author focuses in...