Does Employment Protection Help Immigrants? Evidence from European Labor Markets

45 Pages Posted: 23 Apr 2008

See all articles by Filipa Sa

Filipa Sa

King's College London; IZA Institute of Labor Economics

Date Written: March 1, 2008

Abstract

High levels of employment protection reduce hiring and firing and have a theoretically ambiguous effect on the employment level. Immigrants, being new to the labor market, may be less aware of employment protection regulations and less likely to claim their rights, which may create a gap between the costs for employers of hiring a native relative to hiring an immigrant. This paper tests that hypothesis drawing on evidence for the EU and on two natural experiments for Spain and Italy. The results suggest that strict employment protection legislation (EPL) gives immigrants a comparative advantage relative to natives. Stricter EPL is found to reduce employment and reduce hiring and firing rates for natives. By contrast, stricter EPL has no effect on most immigrants and may even increase employment rates for those who have been in the country for a longer time.

Keywords: employment protection, immigration

JEL Classification: J6

Suggested Citation

Sa, Filipa G., Does Employment Protection Help Immigrants? Evidence from European Labor Markets (March 1, 2008). IZA Discussion Paper No. 3414. Available at SSRN: https://ssrn.com/abstract=1123162

Filipa G. Sa (Contact Author)

King's College London ( email )

150 Stamford Street
London, SE1 9NN
United Kingdom

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

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