Employment Consequences of Employment Protection Legislation

41 Pages Posted: 6 Jul 2012

See all articles by Per Skedinger

Per Skedinger

Research Institute of Industrial Economics (IFN); Linnaeus University - School of Business and Economics

Date Written: March 11, 2011

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 the young.

Keywords: Job security, Employment effects, Employment protection reforms

JEL Classification: J23, J50, K31

Suggested Citation

Skedinger, Per, Employment Consequences of Employment Protection Legislation (March 11, 2011). IFN Working Paper No. 865, 2011. Available at SSRN: https://ssrn.com/abstract=2101663 or http://dx.doi.org/10.2139/ssrn.2101663

Per Skedinger (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

HOME PAGE: http://www.ifn.se/PerS

Linnaeus University - School of Business and Economics ( email )

VÄXJÖ, SE-351 95
Sweden

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