Employment Protection Laws: Policy Issues and Recent Research

Peter Kuhn

Canadian Public Policy, 1993, vol. 19, issue 3, 279-297

Abstract: Employment protection laws abound in the developed world; in Canada they primarily take the form of advance notice requirements of up to four months for layoffs. Recent research on the partial-equilibrium effects of such notice requirements reveals that they are effective in reducing the unemployment experienced by displaced workers; unfortunately however these effects dissipate rather quickly over time, implying that advance notice has little effect on long-term unemployment. Also, there appear to be few incremental gains to raising mandatory notice periods much beyond one month. Research on the general-equilibrium effects of employment protection laws on national employment, unemployment, and wage rates is much scarcer and at this point rather inconclusive. Interactions between employment protection laws and the unemployment insurance system are identified as an important topic for future research.

Date: 1993
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