Does Deregulation Work? Reassessing the Unemployment Effects of Employment Protection

21 Pages Posted: 10 Feb 2015  

Sabina Avdagic

University of Sussex

Date Written: March 2015

Abstract

Using new data, this article examines the effect of employment protection legislation (EPL) on aggregate and youth unemployment in advanced economies and Central and Eastern Europe during 1980–2009. The results offer no clear support for the argument that EPL is a cause of unemployment. Although EPL reaches statistical significance at conventional levels in some models, the results are sensitive to small changes in the sample or the use of alternative estimators. While the analysis suggests some scope for complementary reforms of EPL and the tax wedge in tackling youth unemployment, the findings on the whole indicate that government efforts to tackle unemployment by deregulating EPL alone may well be futile.

Suggested Citation

Avdagic, Sabina, Does Deregulation Work? Reassessing the Unemployment Effects of Employment Protection (March 2015). British Journal of Industrial Relations, Vol. 53, Issue 1, pp. 6-26, 2015. Available at SSRN: https://ssrn.com/abstract=2562607 or http://dx.doi.org/10.1111/bjir.12086

Sabina Avdagic (Contact Author)

University of Sussex ( email )

Sussex House
Falmer
Brighton, Sussex BNI 9RH
United Kingdom

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