Employment Protection Legislation and Job Reallocation across Sectors, Firms and Workers: A Survey

Pierre Cahuc and Marco Palladino

No 16747, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper provides a review of the existing literature on the effects of employment protection legislation (EPL) on job allocation across industries, firms, and workers, and its implications for innovation and economic growth. We analyze empirical studies to assess how EPL influences resource allocation, firm dynamics, and labor market segmentation. The review highlights the heterogeneous effects of EPL on different firms and workers' groups. Additionally, we discuss the channels identified in the structural literature through which EPL-induced job reallocation affects productivity, innovation, and overall growth. While existing evidence demonstrates the significant influence of EPL on all these outcomes, further quantification of these effects remains a research challenge.

Keywords: job protection; job allocation; economic growth; productivity; innovation (search for similar items in EconPapers)
JEL-codes: J23 O47 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2024-01
New Economics Papers: this item is included in nep-bec, nep-eff, nep-sbm and nep-tid
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