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Department of Economics, Copenhagen Business School Working Paper Series, Department of Economics, Copenhagen Business School

No 03-1999:
ON THE EFFECTS OF REDUCING THE GOVERNMENT`S ROLE IN THE LABOUR MARKET: A STYLIZED MODEL FOR EGYPT WITH SOME NUMERICAL POLICY EXAMPLES

Ole Risager and Chang-Po Yang

Abstract: This paper analyzes the consequences of pursuing a less activist Government

employment stabilization policy strategy in Egypt. On the basis of a fairly stylized model we

find that a reduction of the Government’s involvement in the economy along with an

introduction of mild but binding firing regulations in the private sector may lead to a rise in total

employment and to an improvement in Egypt’s trade balance vis-à-vis the rest of the world.

Keywords: Uncertain environment; Job security; Countercyclical government intervention with lifetime employment guarantees; Wages; Employment; Labour market; Egypt; (follow links to similar papers)

JEL-Codes: J40; (follow links to similar papers)

20 pages, February 1, 1999

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