Does employment protection lead to unemployment? A panel data analysis of OECD countries, 1990-2008

Prabirjit Sarkar

MPRA Paper from University Library of Munich, Germany

Abstract: This paper analysed the OECD data on employment protection for 23 OECD countries over the time span 1990-2008 on the basis of alternative dynamic panel data models and panel causality tests and examines the validity of the neo-liberal argument that strictness of employment protection hurts labour through increased long-term and youth unemployment rates. While it finds no empirical basis for this orthodox standpoint it observes that long-term unemployment dampens aggregate production which in turn aggravates unemployment problem.

Keywords: labour law; regular job protection; temporary job protection, unemployment rate; long-term unemployment; youth unemployment (search for similar items in EconPapers)
JEL-codes: J08 J50 J60 K31 (search for similar items in EconPapers)
Date: 2011-12-23
New Economics Papers: this item is included in nep-lab
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