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

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Author Info

  • von Below, David

    () (Institute for International Economic Studies)

  • Thoursie, Peter

    () (Department of Economics, Stockholm University)

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 and, like Sweden, most European countries have a more lenient employment protection for firms below a certain size. Despite the fact that small firms represent a large share of all firms and stand for a substantial share of total employment, there is limited knowledge of how such exemption rules affect firms’ employment behaviour — the consequences of seniority rules on firms’ employment behaviour have not been examined at all. Using data including the population of firms matched with the population of workers for the period 1999–2002, we do not find any general effects on worker flows or on hires and separations. The only exception is a tendency of an increase in the share of separations for older workers and workers with longer seniority. The result points to the importance of considering in detail how legislation is formulated and how it works in practice.

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Bibliographic Info

Paper provided by IFAU - Institute for Evaluation of Labour Market and Education Policy in its series Working Paper Series with number 2008:27.

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Length: 43 pages
Date of creation: 12 Nov 2008
Date of revision:
Publication status: Published as von Below, David and Peter Thoursie, 'Last in, first out? Estimating the effect of seniority rules in Sweden' in Labour Economics, 2010, pages 987-997.
Handle: RePEc:hhs:ifauwp:2008_027

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Keywords: Employment protection; employment change; hires; separations; regression discontinuity;

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References

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Citations

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Cited by:
  1. John Martin & Stefano Scarpetta, 2012. "Setting It Right: Employment Protection, Labour Reallocation and Productivity," De Economist, Springer, vol. 160(2), pages 89-116, June.
  2. Heyman, Fredrik & Skedinger, Per, 2011. "Employment Protection Reform, Enforcement in Collective Agreements and Worker Flows," Working Paper Series 876, Research Institute of Industrial Economics.
  3. Martin Andersson & Steven Klepper, 2013. "Characteristics and performance of new firms and spinoffs in Sweden," Industrial and Corporate Change, Oxford University Press, vol. 22(1), pages 245-280, February.
  4. Skedinger, Per, 2011. "Employment Consequences of Employment Protection Legislation," Working Paper Series 865, Research Institute of Industrial Economics.
  5. von Below, David & Thoursie, Peter Skogman, 2010. "Last in, first out?: Estimating the effect of seniority rules in Sweden," Labour Economics, Elsevier, vol. 17(6), pages 987-997, December.

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