Employment Protection, Threat and Incentive Effects on Worker Effort

Lancaster University Management School Working Paper No. 2007/026

39 Pages Posted: 17 Aug 2007 Last revised: 11 Feb 2010

See all articles by Steve Bradley

Steve Bradley

Lancaster University

Colin P. Green

Department of Economics

Gareth Leeves

University of Queensland - School of Economics

Date Written: May 2, 2008

Abstract

This paper provides new evidence on the effect of changes in employment protection on worker effort. We use novel multi-organization data to examine changes in worker absence as workers move from temporary to permanent employment contracts. Earlier research has demonstrated very large negative effects of employment protection on effort. We find that the magnitudes of these effects are substantially smaller than those identified in previous studies. It has been suggested that the negative effect on effort is due to a fear of dismissal. We demonstrate that the absence behaviour of temporary workers is also influenced by incentives to attain jobs with protection that are unrelated to threat of dismissal, this has not been considered in earlier research. This channel of employment protection effects has important policy implications.

Keywords: absenteeism, effort, temporary contracts

JEL Classification: J29, J45, M54

Suggested Citation

Bradley, Steve and Green, Colin P. and Leeves, Gareth, Employment Protection, Threat and Incentive Effects on Worker Effort (May 2, 2008). Lancaster University Management School Working Paper No. 2007/026. Available at SSRN: https://ssrn.com/abstract=1004486 or http://dx.doi.org/10.2139/ssrn.1004486

Steve Bradley

Lancaster University ( email )

The Management School
Department of Economics
Lancaster LA1 4YX
United Kingdom
+44 1524 593880 (Phone)
+44 1524 594244 (Fax)

Colin P. Green (Contact Author)

Department of Economics ( email )

Trondheim NO-7491
Norway

Gareth Leeves

University of Queensland - School of Economics ( email )

Brisbane, QLD 4072
Australia

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