I need help with this question 1. In the unskilled labor market, workers are oft
ID: 1167028 • Letter: I
Question
I need help with this question
1. In the unskilled labor market, workers are often young and inexperienced. Having little past performance to judge potential employees on, many firms hire workers for a trial period with the understanding that the worker will be dismissed for substandard performance. The commentators think France should reduce its job protection rights. Job protection rights make it relatively difficult and expensive for French firms to fire workers. How might stringent job protection measures affect the demand for unskilled labor?
2. French officials defend job protection measures, arguing that job security makes workers happier and happier workers are more productive workers. How might job protection measures affect worker productivity?
3. Suppose racial stereotypes mean that some employers don't trust minority workers. Because it is difficult to fire workers in France, such employers may not hire minority workers at all, thereby entrenching racial discrimination. Would eliminating these job protection measures ease racial discrimination?
Explanation / Answer
1) When hiring a worker for a job there is always an adverse selction problem . Employers do not know the quality or efficiency of a worker when hiring to the fullest . So firms either take interview or hire workers on a probationary period to judge their skills . Job protection rights protect workers from adverse situations . If such rights and regulations are very stringent then a firm cannot fire a worker so easily . The firms face a difficult situation . So in order to cut down on costs they demand less of unskilled labor . They hire less unskilled labor and try to hire experienced and skillful people to eliminate the costs incurred due to adverse selection and stringent job protection rights .
2) Job protection can affect productivity of a worker in two different and opposite ways . On one hand job protection or security provides a worker with steady source of income . This helps him to enhance his skills by further training or helps him to lead a healthy life which affects his productivity at work . Job protection also reduces fear of losing a job and hence can help a worker freely and happily .
But on the other hand too much of protection can reduce the incentive to work hard . Workers become prone to shirking since they are aware that they are highly protected by such rights . This can reduce productivity .
3) Eliminating these job protection measures may even agravate such racial discrimination as without protection , the minority workers can be hired and fired as and when required . Such job protection rights should be implemented which makes it mandatory to hire a certain percentage of minority workers .