Is regulatory compliance by employers possible without enforcement? Evidence from the Swedish labor market

Axel Cronert ()
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Axel Cronert: Uppsala University, Postal: www.uu.se

No 2019:23, Working Paper Series from IFAU - Institute for Evaluation of Labour Market and Education Policy

Abstract: This study shines new light on an ongoing debate about the extent to which discouraging enforcement activities are necessary to make regulated actors comply with government regulations. Specifically, it evaluates a long-standing but essentially unenforced regulation that mandated employers in Sweden to post their vacancies at the Public Employment Service (PES) to improve matching and the labor market prospects of disadvantaged workers. Using comprehensive vacancy data from the PES, it tests whether the regulation despite not being enforced—influenced employers’ vacancy posting behavior in the period prior to its partial repeal in 2007. Exploiting the fact that the repeal did not apply to employers in the central government sector, the difference-indifferences analyses conducted in this study identify a substantial and significant negative effect of repealing the unenforced law on employers’ vacancy posting behavior, under reasonable assumptions. This finding is at odds with standard deterrence models of regulatory compliance and hints at an important role for organizational factors related to cultures and norms. A supplementary analysis of heterogeneous effects among local government employers investigates to what extent some organizational factors are correlated to compliance with the unenforced regulation.

Keywords: regulatory compliance; cultures and norms (search for similar items in EconPapers)
JEL-codes: J20 L20 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2019-10-14
New Economics Papers: this item is included in nep-eur, nep-law and nep-lma
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