Working Paper Series
Employment Consequences of Employment Protection Legislation
Abstract: This article surveys the literature and adds to the
evidence on the impact of employment protection legislation on employment.
While stringent employment protection contributes to less turnover and job
reallocation, the effects on aggregate employment and unemployment over the
business cycle are more uncertain. Exploitation of partial reforms and the
use of micro data in recent research appear not to have affected results
regarding employment and unemployment in any systematic way. Labour market
prospects of young people and other marginal groups seem to worsen as a
consequence of increased stringency of the legislation. It is debatable
whether marginal groups have gained much from the widespread policy
strategy to liberalize regulations of temporary employment and leave
regulations of regular employment intact. My own analysis suggests that
increased stringency of regulations for regular work is associated with a
higher incidence of involuntary temporary employment, particularly among
Keywords: Job security; Employment effects; Employment protection reforms; (follow links to similar papers)
JEL-Codes: J23; J50; K31; (follow links to similar papers)
40 pages, March 14, 2011
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- This paper is forthcoming as:
Skedinger, Per, 'Employment Consequences of Employment Protection Legislation', Nordic Economic Policy Review.
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