Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1105: Seniority Rules, Worker Mobility and Wages: Evidence from Multi-Country Linked Employer-Employee Data

Petri Böckerman (), Per Skedinger () and Roope Uusitalo ()
Additional contact information
Petri Böckerman: Turku School of Economics, Labour Institute for Economic Research, Helsinki a
Per Skedinger: Research Institute of Industrial Economics (IFN)
Roope Uusitalo: Jyväskylä University School of Business and Economics

Abstract: We construct a multi-country employer-employee data to examine the consequences of employment protection. We identify the effects by comparing worker exit rates between units of the same firm that operate in two countries that have different seniority rules. The results show that last-in-first-out rules reduce dismissals of older, more senior workers, especially in shrinking multinational firms, and increase their bargaining power, resulting in a steeper seniority-wage profile.

Keywords: Multi-country linked employer-employee data; Employment protection legislation; Seniority rules

JEL-codes: J08; J32; J63; K31; L51

35 pages, January 8, 2016

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