The Economic Significance of Laws Relating to Employment Protection and Different Forms of Employment: Analysis of a Panel of 117 Countries, 1990-2013
55 Pages Posted: 25 May 2018 Last revised: 29 May 2018
Date Written: May 1, 2018
This paper presents findings from analysis of a dataset of labour laws, based on the Centre for Business Research Labour Regulation Index (CBR-LRI), which has recently been extended to cover 117 countries and the period from 1970 to 2013. The dataset shows that laws regulating different forms of employment (DFE), including part-time work, fixed-term employment and agency work, have become significantly more protective over time, in particular since the late 1990s. Employment protection laws (EPL), covering individual dismissal, collective consultation and codetermination rights, have become steadily more protective since the 1970s. Europe has seen a decline in the level of EPL since the onset of the sovereign debt crisis in 2008, but this trend is small, on average, by comparison to earlier increases in protection beginning in the 1970s, and has not been replicated in other regions. Time-series econometric analysis using non-stationary panel data methods suggests that strengthening worker protection in relation to DFE and EPL is associated with an increase in labour’s share of national income, rising labour force participation, rising employment, and falling unemployment, although the observed magnitudes are small when set against wider economic trends.
Note: We are grateful to the DFID-ESRC Joint Fund on Poverty Alleviation (Award ES/J019402/1, ‘Labour Law and Poverty Alleviation in Low- and Middle-income Countries) and the International Labour Office (ILO) for supporting our research. The work builds on an analysis first presented in chapter 5 of the ILO’s World Employment and Social Outlook Report 2015 (ILO, 2015b). The analysis presented here is the authors’ only, and does not represent the views of DFID, the ESRC, or the ILO. Correspondence should be addressed to Simon Deakin (firstname.lastname@example.org). A version of this paper is forthcoming in International Labour Review.
Keywords: labour regulation, employment protection, labour flexibility, employment, unemployment, productivity, labour share, leximetrics, time series analysis, pooled mean group regression
JEL Classification: C22, C23, K31, O15
Suggested Citation: Suggested Citation