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Does Employment Protection Reduce the Demand for Unskilled Labor?

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Author Info
Daniel, Kirsten (Loyola University)
Siebert, W. Stanley () (University of Birmingham and IZA Bonn)

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Abstract

Perhaps it does. 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 1975-95 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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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1290.

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Length: 29 pages
Date of creation: Sep 2004
Date of revision:
Handle: RePEc:iza:izadps:dp1290

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Related research
Keywords: employment protection; labor demand; unskilled workers; firm panel data;

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Find related papers by JEL classification:
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
J83 - Labor and Demographic Economics - - Labor Standards - - - Workers' Rights

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  2. Lazear, Edward P, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, MIT Press, vol. 105(3), pages 699-726, August. [Downloadable!] (restricted)
  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. [Downloadable!] (restricted)
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  5. Modesto, Leonor, 2004. "Unions, Firing Costs and Unemployment," IZA Discussion Papers 1157, Institute for the Study of Labor (IZA). [Downloadable!]
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  6. John S. Heywood & Lok-Sang Ho & Xiangdong Wei, 1999. "Determinants of hiring older workers: Evidence from Hong Kong," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 52(3), pages 444-459, April.
  7. Diego Rodriguez-Palenzuela & Juan Francisco Jimeno-Serrano, 2002. "Youth unemployment in the OECD: demographic shifts; labour market institutions, and macroeconomic shock," Working Paper Series 155, European Central Bank. [Downloadable!]
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  8. McLaughlin, Kenneth J & Bils, Mark, 2001. "Interindustry Mobility and the Cyclical Upgrading of Labor," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 94-135, January. [Downloadable!] (restricted)
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  9. Nickell, S.J., 1987. "Dynamic models of labour demand," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 9, pages 473-522 Elsevier. [Downloadable!] (restricted)
  10. Koeniger, Winfried & Leonardi, Marco & Nunziata, Luca, 2004. "Labour Market Institutions and Wage Inequality," IZA Discussion Papers 1291, Institute for the Study of Labor (IZA). [Downloadable!]
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  11. Nickell, S. & Layard, R., 1997. "Labour Market Institutions and Economic Performance," Papers 23, Centre for Economic Performance & Institute of Economics.
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  12. Bentolila, Samuel & Bertola, Giuseppe, 1990. "Firing Costs and Labour Demand: How Bad Is Eurosclerosis?," Review of Economic Studies, Blackwell Publishing, vol. 57(3), pages 381-402, July. [Downloadable!] (restricted)
  13. Giuseppe Bertola & Francine D. Blau & Lawrence M. Kahn, 2002. "Labor Market Institutions and Demographic Employment Patterns," NBER Working Papers 9043, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  14. Nicoletti, Giuseppe & Scarpetta, Stefano, 2003. "Regulation, productivity, and growth : OECD evidence," Policy Research Working Paper Series 2944, The World Bank. [Downloadable!]
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  15. 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. [Downloadable!] (restricted)
  16. Kugler, Adriana D. & Saint-Paul, Gilles, 2000. "Hiring And Firing Costs, Adverse Selection And The Persistence Of Unemployment," CEPR Discussion Papers 2410, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  18. 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. [Downloadable!] (restricted)
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  19. 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, Blackwell Publishers Ltd/London School of Economics, vol. 39(4), pages 505-528, December. [Downloadable!] (restricted)
  20. Daniel, Kirsten & Heywood, John S., 2007. "The determinants of hiring older workers: UK evidence," Labour Economics, Elsevier, vol. 14(1), pages 35-51, January. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. W. Stanley Siebert, 2006. "Labour Market Regulation in the EU-15: Causes and Consequences - A Survey," IZA Discussion Papers 2430, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Doowon Lee, 2006. "The Korean Economy in Transition: In Search for a New Model," Global Economic Review, Taylor and Francis Journals, vol. 35(2), pages 207-230, June. [Downloadable!] (restricted)
  3. 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]. [Downloadable!]
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