Controlling for country fixed effects, there is a positive and statistically significant relationship between the degree of housing market regulation (HMR) and the strictness of employment protection legislation (EPL) in OECD countries. We provide a model in which HMR increases foreclosure costs in case of mortgage default, while EPL raises the administrative cost of dismissal. Owing to banks' lending behavior, individuals' demand for job protection increases with the cost of foreclosure. We use the model to discuss social housing and family insurance, the case for mortgage unemployment insurance, the impact of min down-payment policies, regulations on the use of fixed-term contracts, the failure of a 2006 French reform of labor contracts, and feed-back effects from HMR to EPL.

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In this paper, we analyze the trade war between two large countries when the trade policy is decided through majority voting. We show how the distributive aspect of trade policy interacts with the strategic aspect. It is shown that the voting equilibrium depends on the distribution of the factor endowment. If median voters in each country own relatively more (less) than the aggregate economy of the factor used intensively in the production of the imported good, the tariffs outcome of the trade war at home (abroad) is larger (lower) than the Johnson-Mayer one. This is to say that the strategic effects from trade policy can be isolated from the distributive aspect. Moreover, an increase of the median of the scarce/abundant factor distribution in one country leads to a larger tariff in this country and a lower tariff in the other. This implies that the political situation in one country affects the outcome of the trade war for both.

This paper presents a fiscal competition model in which policy decisions are not only corporate taxes but also whether or not to control the multinational firms'(MNF) profit shifting activities. MNFs manipulate transfer prices as a means to shift profits from high to low tax countries. National governments may hinder such a behavior by monitoring the MNF's accounts. We show that a country may optimally decide not to monitor the MNF for two different reasons. On the one hand, that makes it anattractive location for the MFN even if the corporate tax is high. On the other hand, not monitoring increases the mobility of the MFN's profits. This shifts the focus of tax competition in that corporate taxation then influences not only the MNF's location as the place where it declares its profits.