The Effects of Employment Protection: Learning from Variable Enforcement

Tito Boeri () and Juan F Jimeno ()

No 3926, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Employment protection legislations (EPL) are not enforced uniformly across the board. There are a number of exemptions to the coverage of these provisions: firms below a given threshold scale and workers with temporary contracts are not subject to the most restrictive provisions. This within-country variation in enforcement allows making inferences on the impact of EPL that go beyond the usual cross-country approach. In this Paper we develop a simple model that explains why these exemptions are in place to start with. Then we empirically assess the effects of EPL on dismissal probabilities, based on a double-difference approach. Our results are in line with the predictions of the theoretical model. Workers in firms exempted from EPL are more likely to be laid-off. We do not observe this effect in the case of temporary workers.

Keywords: efficiency wages; employment protection; job loss (search for similar items in EconPapers)
JEL-codes: J10 J64 (search for similar items in EconPapers)
Date: 2003-06
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Working Paper: The Effects of Employment Protection: Learning from Variable Enforcement
Working Paper: The Effects of Employment Protection: Learning from Variable Enforcement (2003)
Working Paper: The Effects of Employment Protection: Learning from Variable Enforcement (2004)
Journal Article: The effects of employment protection: Learning from variable enforcement (2005)
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