Job Protection Legislation and Productivity Growth in OECD Countries

54 Pages Posted: 27 Apr 2009

See all articles by Andrea Bassanini

Andrea Bassanini

Organization for Economic Co-Operation and Development (OECD); Université d' Evry - Centre D'Etudes des Politiques Economiques et de L'Emploi (EPEE)

L. Nunziata

University of Padua - Department of Economics; IZA Institute of Labor Economics

Danielle Venn

affiliation not provided to SSRN

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Abstract

We examine the effect of dismissal regulation on productivity in the OECD, using annual cross-country aggregate data on the stringency of employment protection legislation and industry-level data on productivity from 1982 to 2003. Our empirical results suggest that mandatory dismissal regulations have a depressing impact on productivity growth in industries where layoff restrictions are more likely to be binding. By contrast, we find no evidence of a productivity effect of regulations concerning temporary contracts, which suggests that partial reforms, facilitating the use of fixed-term and atypical contracts, are unlikely to have an important impact on efficiency and technological change and cannot therefore be a substitute for comprehensive reforms whereby dismissal restrictions for open-ended contracts are also weakened.

Suggested Citation

Bassanini, Andrea and Nunziata, Luca and Venn, Danielle, Job Protection Legislation and Productivity Growth in OECD Countries. Economic Policy, Vol. 24, Issue 58, pp. 349-402, April 2009. Available at SSRN: https://ssrn.com/abstract=1376024 or http://dx.doi.org/10.1111/j.1468-0327.2009.00221.x

Andrea Bassanini (Contact Author)

Organization for Economic Co-Operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, MO 63108
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+33 1 45 24 90 32 (Phone)
+33 1 45 24 18 59 (Fax)

HOME PAGE: http://www.freeyellow.com/members7/bassax/

Université d' Evry - Centre D'Etudes des Politiques Economiques et de L'Emploi (EPEE)

Boulevard Francois Mitterrand
F-91025 Evry Cedex
France

Luca Nunziata

University of Padua - Department of Economics ( email )

via Del Santo 33
Padova, 35123
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Danielle Venn

affiliation not provided to SSRN ( email )

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