Employment protection and labor productivity
Carl Magnus Bjuggren ()
Journal of Public Economics, 2018, vol. 157, issue C, 138-157
Current 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 Swedish register data. A reform of employment protection rules in 2001 enabled small firms with fewer than eleven employees to exempt two workers from the seniority rules. I treat this reform as a natural experiment. My results indicate that increased labor market flexibility increases labor productivity. This increase is explained by total factor productivity and capital intensity rather than 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: J23 J24 J32 J38 M51 K31 D22 (search for similar items in EconPapers)
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Working Paper: Employment Protection and Labor Productivity (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:157:y:2018:i:c:p:138-157
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