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Does employment protection reduce the demand for unskilled labour?

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  • Kirsten Daniel
  • W. S. Siebert

Abstract

We propose a model in which workers with little education or in the tails of the age distribution - the inexperienced and the old - have more chance of job failure (mismatch). Recruits' average education should then increase and the standard deviation of starting age decrease when strict employment protection raises hiring and firing costs. We test the model using annual distributions of recruits' characteristics from a 1975-1995 panel of plants in Belgium, the Netherlands, Italy, the UK and the US. The model's predictions are supported using the Blanchard-Wolfers index of employment protection as well as our alternative index.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500080998
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal International Economic Journal.

Volume (Year): 19 (2005)
Issue (Month): 2 ()
Pages: 197-222

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Handle: RePEc:taf:intecj:v:19:y:2005:i:2:p:197-222

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Related research

Keywords: Employment protection; labour demand; unskilled workers; firm panel data;

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References

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  1. Jane Morton & W. S. Siebert, 2001. "Labour Market Regimes and Worker Recruitment and Retention in the European Union: Plant Comparisons," British Journal of Industrial Relations, London School of Economics, vol. 39(4), pages 505-528, December.
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  3. Di Tella, Rafael & MacCulloch, Robert, 2005. "The consequences of labor market flexibility: Panel evidence based on survey data," European Economic Review, Elsevier, vol. 49(5), pages 1225-1259, July.
  4. Leonor Modesto, 2008. "Unions, Firing Costs, and Unemployment," LABOUR, CEIS, vol. 22(3), pages 509-546, 09.
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  17. Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages C1-33, March.
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  22. Casey Ichniowski & Kathryn Shaw, 2003. "Beyond Incentive Pay: Insiders' Estimates of the Value of Complementary Human Resource Management Practices," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 155-180, Winter.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Employment protection effects
    by chris dillow in Stumbling and Mumbling on 2011-01-11 13:43:39
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Cited by:
  1. Ilmakunnas, Pekka & Ilmakunnas, Seija, 2012. "Age segregation and hiring of older employees: low mobility revisited," MPRA Paper 37655, University Library of Munich, Germany.
  2. Siebert, W. Stanley & Peng, Fei & Maimaiti, Yasheng, 2011. "HRM Practices and Performance of Family-Run Workplaces: Evidence from the 2004 WERS," IZA Discussion Papers 5899, Institute for the Study of Labor (IZA).
  3. Doowon Lee, 2006. "The Korean Economy in Transition: In Search for a New Model," Global Economic Review, Taylor & Francis Journals, vol. 35(2), pages 207-230.
  4. Peng, Fei & Kang, Lili, 2012. "Labour market institutions and skill premiums: an empirical analysis on the UK 1972-2002," MPRA Paper 38541, University Library of Munich, Germany.
  5. Siebert, W. Stanley, 2006. "Labour Market Regulation in the EU-15: Causes and Consequences – A Survey," IZA Discussion Papers 2430, Institute for the Study of Labor (IZA).
  6. Jirjahn, Uwe & Pfeifer, Christian & Tsertsvadze, Georgi, 2006. "Mikroökonomische Beschäftigungseffekte des Hamburger Modells zur Beschäftigungsförderung," IAB Discussion Paper 200625, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

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