Job protection legislation and productivity growth in OECD countries

Appropriate growth policy: a unifying framework

Andrea Bassanini, Luca Nunziata and Danielle Venn

Economic Policy, 2009, vol. 24, issue 58, 349-402

Abstract: We examine the effect of dismissal regulation on productivity in the OECD, using annual cross-country aggregate data on the stringency of employment protection legislation and industry-level data on productivity from 1982 to 2003. Our empirical results suggest that mandatory dismissal regulations have a depressing impact on productivity growth in industries where layoff restrictions are more likely to be binding. By contrast, we find no evidence of a productivity effect of regulations concerning temporary contracts, which suggests that partial reforms, facilitating the use of fixed-term and atypical contracts, are unlikely to have an important impact on efficiency and technological change and cannot therefore be a substitute for comprehensive reforms whereby dismissal restrictions for open-ended contracts are also weakened.— Andrea Bassanini, Luca Nunziata and Danielle Venn

Date: 2009
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Working Paper: Job Protection Legislation and Productivity Growth in OECD Countries (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ecpoli:v:24:y:2009:i:58:p:349-402.

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