The Effect of Employment Protection on Labor Productivity
Carl Magnus Bjuggren ()
No 1061, Working Paper Series from Research Institute of Industrial Economics
The theoretical predictions of how employment protection affects firm productivity are ambiguous. In this paper I study the effect of employment protection rules on labor productivity using micro data on Swedish firms. A reform of the employment protection rules in 2001 made it possible for small firms with less than eleven employees to exempt two workers from the seniority rules. I exploit the reform as a natural experiment. My results indicate that increased labor market exibility increases labor productivity. The increase is not explained by capital intensity or the educational level of workers.
Keywords: Employment Protection; Labor Market Regulations; Labor Productivity; Last-in-First-out Rules (search for similar items in EconPapers)
JEL-codes: D22 J23 J24 J32 J38 K31 M51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff, nep-eur, nep-lab and nep-lma
Date: 2015-03-16, Revised 2015-04-16
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Working Paper: The Effect of Employment Protection Rules on Firm Productivity - A Natural Experiment (2013)
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Persistent link: http://EconPapers.repec.org/RePEc:hhs:iuiwop:1061
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