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Employment Protection and Labor Productivity

Carl Magnus Bjuggren ()

No 1061, Working Paper Series from Research Institute of Industrial Economics

Abstract: 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: 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 2017-11-30
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http://www.ifn.se/wfiles/wp/wp1061.pdf (application/pdf)

Related works:
Journal Article: Employment protection and labor productivity (2018) Downloads
Working Paper: The Effect of Employment Protection Rules on Firm Productivity - A Natural Experiment (2013) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:1061

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