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

See all articles by Zoe Adams

Zoe Adams

University of Cambridge

Louise Bishop

University of Cambridge - Centre for Business Research (CBR)

Simon Deakin

University of Cambridge - Centre for Business Research (CBR); European Corporate Governance Institute (ECGI); University of Cambridge - Faculty of Law

Colin Fenwick

International Labour Office

Sara Martinsson Garzelli

International Labour Office

Giudy Rusconi

Evidence for Policy India, Institute for Financial Management Research

Date Written: May 1, 2018

Abstract

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 (s.deakin@cbr.cam.ac.uk). 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

Adams, Zoe and Bishop, Louise and Deakin, Simon F. and Fenwick, Colin and Martinsson Garzelli, Sara and Rusconi, Giudy, The Economic Significance of Laws Relating to Employment Protection and Different Forms of Employment: Analysis of a Panel of 117 Countries, 1990-2013 (May 1, 2018). University of Cambridge Faculty of Law Research Paper No. 36/2018; European Corporate Governance Institute (ECGI) - Law Working Paper No. 406/2018. Available at SSRN: https://ssrn.com/abstract=3184784 or http://dx.doi.org/10.2139/ssrn.3184784

Zoe Adams

University of Cambridge ( email )

Louise Bishop

University of Cambridge - Centre for Business Research (CBR) ( email )

Top Floor, Judge Business School Building
Trumpington Street
Cambridge, CB2 1AG
United Kingdom

Simon F. Deakin (Contact Author)

University of Cambridge - Centre for Business Research (CBR) ( email )

Top Floor, Judge Business School Building
Trumpington Street
Cambridge, CB2 1AG
United Kingdom
+ 44 1223 335243 (Phone)

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

University of Cambridge - Faculty of Law ( email )

10 West Road
Cambridge, CB3 9DZ
United Kingdom

Colin Fenwick

International Labour Office ( email )

CH-1211 Geneva 22
Switzerland

Sara Martinsson Garzelli

International Labour Office ( email )

Route des Morillons 4
Geneva, 1211
Switzerland

Giudy Rusconi

Evidence for Policy India, Institute for Financial Management Research ( email )

24 Kothari Road
Chennai, 600 034
India

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