Employment Regulations through the Eyes of Employers: Do They Matter and How Do Firms Respond to Them?

Gaelle Pierre and Stefano Scarpetta

No 1424, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper, we present evidence on how employers perceive labor regulations and react when these are perceived to constrain the operation of their firm. The paper draws from harmonized surveys of (up to) 17,000 firms around the world, and compares employers' responses with actual labor legislation. We find that employers' concerns about labor regulations are closely matched by the relative stringency of de jure labor laws. Countries that have, from an international perspective, tight labor regulations tend to have higher proportions of employers reporting these regulations as severe constraints. But not all firms are affected in the same way by onerous labor regulations. Medium sized firms are those whose business and prospect for growth are most negatively affected. Similarly, innovating firms are disproportionally affected by tight labor regulations. There is also clear evidence in the data that firms facing tight regulations invest more in training and make greater use of temporary employment. Small firms mainly rely on temporary employment, while medium and large firms, as well as innovating firms, tend to rely more on on-the-job training if labor regulations make hiring and firing very costly.

Keywords: training; firms surveys; employment protection indices; temporary employment (search for similar items in EconPapers)
JEL-codes: J23 J65 K31 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2004-12
New Economics Papers: this item is included in nep-lab, nep-law and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (58)

Published - revised version published in: IZA Journal of Labor Policy 2013, 2:15

Downloads: (external link)
https://docs.iza.org/dp1424.pdf (application/pdf)

Related works:
Working Paper: Employment regulations through the eyes of employers - do they matter and how do firms respond to them? (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp1424

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().