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Last in, first out?: Estimating the effect of seniority rules in Sweden

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  • von Below, David
  • Thoursie, Peter Skogman
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    Abstract

    In this paper we investigate whether a relaxation in seniority rules (the "last-in-first-out" principle) had any effect on firms' employment behaviour. Seniority rules exist in several countries, but consequences of seniority rules on firms' employment behaviour have not been examined previously. The "last-in-first-out" principle in Sweden was reformed in January 2001 such that employers with ten or fewer employees were allowed to exempt two workers from the seniority rule. Using an employer-employee unbalanced panel data for the period 1996-2005, we find that both hires and separations increased in small firms relative to large firms by 5%. This also implies that there were no effects on firms' net employment. Our results show that firms reacted to changes in the seniority rules, but we argue that the effects are not overwhelmingly large.

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    Bibliographic Info

    Article provided by Elsevier in its journal Labour Economics.

    Volume (Year): 17 (2010)
    Issue (Month): 6 (December)
    Pages: 987-997

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    Handle: RePEc:eee:labeco:v:17:y:2010:i:6:p:987-997

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    Web page: http://www.elsevier.com/locate/labeco

    Related research

    Keywords: Employment protection Employment change Hires Separations;

    References

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    1. Bauer, Thomas K. & Bender, Stefan & Bonin, Holger, 2004. "Dismissal Protection and Worker Flows in Small Establishments," IZA Discussion Papers 1105, Institute for the Study of Labor (IZA).
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    13. Pedro S. Martins, 2009. "Dismissals for Cause: The Difference That Just Eight Paragraphs Can Make," Journal of Labor Economics, University of Chicago Press, vol. 27(2), pages 257-279, 04.
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    22. repec:fth:iniesr:432 is not listed on IDEAS
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    25. von Below, David & Thoursie, Peter, 2008. "Last in, first out? Estimating the effect of seniority rules in Sweden," Working Paper Series 2008:27, IFAU - Institute for Evaluation of Labour Market and Education Policy.
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    Citations

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    Cited by:
    1. Bassanini, Andrea & Garnero, Andrea, 2012. "Dismissal Protection and Worker Flows in OECD Countries: Evidence from Cross-Country/Cross-Industry Data," IZA Discussion Papers 6535, Institute for the Study of Labor (IZA).
    2. Martin, John P. & Scarpetta, Stefano, 2011. "Setting It Right: Employment Protection, Labour Reallocation and Productivity," IZA Policy Papers 27, Institute for the Study of Labor (IZA).
    3. Olsson, Martin, 2013. "Employment protection and parental child care," Working Paper Series 2013:2, IFAU - Institute for Evaluation of Labour Market and Education Policy.

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