The Economics of Employment Protection

John Addison and Paulino Teixeira

No 381, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Empirical investigation of the labor market consequences of employment protection has mushroomed since Lazear’s (1990) pioneering study. Having sketched the theoretical background, we chart the course of the modern empirical literature. We focus mainly on dismissals protection, distinguishing between the themes of employment and unemployment development and labor market dynamics proper. Our discussion of employment and unemployment largely deals with the effect of employment protection on levels of these outcome indicators. We distinguish between overall and compositional effects (e.g., by demographic group and type of contract), between developing and industrialized nations, and identify some key control variables. Our discussion of labor market dynamics focuses on the speed of adjustment issue and on gross flows. It also formalizes the link between analyses of levels and changes in variables. At all times potential offsets to the adverse effects of employment protection receive consideration.

Keywords: employment adjustment; Severance pay; employment protection indices; labor standards; employment; unemployment; gross flows (search for similar items in EconPapers)
JEL-codes: E24 J23 J65 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2001-10
New Economics Papers: this item is included in nep-ltv
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Citations: View citations in EconPapers (56)

Published - published in: Journal of Labor Research, 2003, 24 (1), 85-129

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Journal Article: The Economics of Employment Protection (2003)
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