Job security provisions are frequently cited as inhibiting the functioning of labour markets in Europe. However, as with many forms of non-price regulation, it is difficult to assess how tightly these regulations bind and influence labour market outcomes. We use an industry-country panel of OECD countries over 20 years to estimate adjustment paths for employment and output conditional on wages, the capital stock and exchange rates. We find that job security provisions are correlated with the speed of adjustment of employment and output (restrictive legislation slowing adjustment down), and that controlling for industry effects is important in isolating this effect. Copyright 2000 by The London School of Economics and Political Science
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Article provided by London School of Economics and Political Science in its journal Economica.
Volume (Year): 67 (2000) Issue (Month): 267 (August) Pages: 419-35 Download reference. The following formats are available: HTML,
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