Employment protection legislation and labor court activity in Spain

Juan F Jimeno, Marta Martínez-Matute () and Juan Mora-Sanguinetti

No 1507, Working Papers from Banco de España

Abstract: Labor courts may introduce a significant wedge between “legal” firing costs and “effective” (post-trial) firing costs. Apart from procedural costs, there is uncertainty over judges’ rulings, in particular over the likelihood of a “fair” dismissal ultimately being ruled as “unfair”, which may increase firing costs significantly. In 2010 and 2012, reforms of Employment Protection Legislation widened the definition of fair economic dismissals in Spain. In this paper we look at Labor Court rulings on dismissals across Spanish provinces before and after the EPL reforms (2004-2014). We make this comparison taking into account a set of co-variates (local labor market conditions, characteristics of the Labor Courts, pre-trial conciliations, congestion of Labor Courts) which may determine the selection of dismissal cases ruled by Labor Courts. Our results suggest that, despite the 2010 and 2012 EPL reforms, the proportion of economic redundancies being ruled as fair by Labor Courts has not substantially increased, although it is now less negatively associated with the local unemployment rate than in the pre-reform period.

Keywords: employment protection legislation; firing costs; unemployment. (search for similar items in EconPapers)
JEL-codes: J52 J53 K31 K41 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2015-03
New Economics Papers: this item is included in nep-eur, nep-lab, nep-law and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:1507

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