Labour protection and productivity in the European economies: 1995-2005
AbstractThe present study examines cross-national and sectoral differences in multifactor productivity growth in sixteen European countries from 1995 to 2005. The main aim is to ascertain the role of flexible employment contracts and collective labour relationships in explaining the ample differentials recorded in the European economy. Research Findings We use the EU KLEMS database for growth accounting and a broad set of indicators of labour regulations, covering two distinct ‘areas’ of labour regulation: employment laws and collective relations laws. This comprehensive approach allow us to consider arrangements that regulate allocation of labour inputs (fixed-term, part-time contracts, hours worked) and of payoff and decision rights of employees. We find that, since 1995, European countries have not followed similar patterns of growth. A large number of variations between European economies are caused by deep differentials in multifactor productivity and part of this heterogeneity is caused by sectoral diversities. We show that, in labour-intensive sectors such as services, fixed-term contracts, which imply shorter-term jobs and lower employment tenures, may discourage investment in skills and have detrimental effects on multifactor productivity increases. We also find that some forms of labour regulation and arrangements that give a ‘voice’ to employees mitigate these perverse effects on efficiency patterns. Employment protection reforms which slacken the rules of fixed-term contracts cause potential drawbacks in terms of low productivity gains. More stringent regulation of these practices, as well as a climate of collective relations, sustain long-term relationships and mitigate these negative effects.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 12710.
Date of creation: 13 Jan 2009
Date of revision:
productivity; labour regulation; comparative institutions;
Find related papers by JEL classification:
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-17 (All new papers)
- NEP-EEC-2009-01-17 (European Economics)
- NEP-EFF-2009-01-17 (Efficiency & Productivity)
- NEP-LAB-2009-01-17 (Labour Economics)
- NEP-REG-2009-01-17 (Regulation)
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.:
- Hopenhayn, Hugo & Rogerson, Richard, 1993. "Job Turnover and Policy Evaluation: A General Equilibrium Analysis," Journal of Political Economy, University of Chicago Press, vol. 101(5), pages 915-38, October.
- Dew-Becker, Ian & Gordon, Robert J, 2008.
"The Role of Labour Market Changes in the Slowdown of European Productivity Growth,"
CEPR Discussion Papers
6722, C.E.P.R. Discussion Papers.
- Ian Dew-Becker & Robert J. Gordon, 2008. "The Role of Labor Market Changes in the Slowdown of European Productivity Growth," NBER Working Papers 13840, National Bureau of Economic Research, Inc.
- David H. Autor & William R. Kerr & Adriana D. Kugler, 2007.
"Do Employment Protections Reduce Productivity? Evidence from U.S. States,"
NBER Working Papers
12860, National Bureau of Economic Research, Inc.
- William Kerr & Adriana Kugler & David Autor, 2007. "Do Employment Protections Reduce Productivity? Evidence from U.S. States," Working Papers 07-04, Center for Economic Studies, U.S. Census Bureau.
- David H. Autor & William R. Kerr & Adriana D. Kugler, 2007. "Do Employment Protections Reduce Productivity? Evidence from U.S. States," Harvard Business School Working Papers 07-048, Harvard Business School.
- Autor, David & Kerr, William & Kugler, Adriana, 2007. "Do Employment Protections Reduce Productivity? Evidence from U.S. States," IZA Discussion Papers 2571, Institute for the Study of Labor (IZA).
- Giuseppe Bertola, 1991.
"Flexibility, Investment, and Growth,"
NBER Working Papers
3864, National Bureau of Economic Research, Inc.
- Tito Boeri & Pietro Garibaldi, 2007.
"Two Tier Reforms of Employment Protection: a Honeymoon Effect?,"
Royal Economic Society, vol. 117(521), pages 357-385, 06.
- Tito Boeri & Pietro Garibaldi, 2007. "Two Tier Reforms of Employment Protection: A Honeymoon Effect?," Carlo Alberto Notebooks 37, Collegio Carlo Alberto.
- Engellandt, Axel & Riphahn, Regina T., 2005.
"Temporary contracts and employee effort,"
Elsevier, vol. 12(3), pages 281-299, June.
- Michele Belot & Jan Boone & Jan van Ours, 2004.
"Welfare Improving Employment Protection,"
DEGIT Conference Papers
c009_004, DEGIT, Dynamics, Economic Growth, and International Trade.
- Schivardi, Fabiano & Torrini, Roberto, 2005.
"Identifying the Effects of Firing Restrictions Through Size-Contingent Differences in Regulation,"
CEPR Discussion Papers
5303, C.E.P.R. Discussion Papers.
- Schivardi, Fabiano & Torrini, Roberto, 2008. "Identifying the effects of firing restrictions through size-contingent differences in regulation," Labour Economics, Elsevier, vol. 15(3), pages 482-511, June.
- Blanchard, Olivier Jean & Landier, Augustin, 2002.
"The Perverse Effects of Partial Labor Market Reform: Fixed Duration Contracts in France,"
Open Access publications from University of Toulouse 1 Capitole
http://neeo.univ-tlse1.fr, University of Toulouse 1 Capitole.
- Olivier Blanchard & Augustin Landier, 2001. "The Perverse Effects of Partial Labor Market Reform: Fixed Duration Contracts in France," NBER Working Papers 8219, National Bureau of Economic Research, Inc.
- Nickell, S. & Layard, R., 1997.
"Labour Market Institutions and Economic Performance,"
23, Centre for Economic Performance & Institute of Economics.
- Nickell, Stephen & Layard, Richard, 1999. "Labor market institutions and economic performance," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 46, pages 3029-3084 Elsevier.
- Richard Layard & Stephen Nickell, 1998. "Labour Market Institutions and Economic Performance," CEP Discussion Papers dp0407, Centre for Economic Performance, LSE.
- Dolado, Juan José & García-Serrano, Carlos & Jimeno, Juan F., .
"Drawing Lessons from the Boom of Temporary Jobs in Spain,"
Open Access publications from Universidad Carlos III de Madrid
info:hdl:10016/3263, Universidad Carlos III de Madrid.
- Juan J Dolado & Carlos Garcia--Serrano & Juan F. Jimeno, 2002. "Drawing Lessons From The Boom Of Temporary Jobs In Spain," Economic Journal, Royal Economic Society, vol. 112(721), pages F270-F295, June.
- Dolado, Juan J. & Garcia-Serrano, Carlos & Jimeno, Juan Francisco, 2001. "Drawing Lessons From the Boom of Temporary Jobs in Spain," CEPR Discussion Papers 2884, C.E.P.R. Discussion Papers.
- Dominique Goux & Eric Maurin & Marianne Pauchet, 1999.
"Fixed-term Contracts and the Dynamics of Labour Demand,"
99-02, Centre de Recherche en Economie et Statistique.
- Goux, Dominique & Maurin, Eric & Pauchet, Marianne, 2001. "Fixed-term contracts and the dynamics of labour demand," European Economic Review, Elsevier, vol. 45(3), pages 533-552, March.
- Bassanini, Andrea & Nunziata, Luca & Venn, Danielle, 2008.
"Job Protection Legislation and Productivity Growth in OECD Countries,"
IZA Discussion Papers
3555, Institute for the Study of Labor (IZA).
- Andrea Bassanini & Luca Nunziata & Danielle Venn, 2009. "Job protection legislation and productivity growth in OECD countries," Economic Policy, CEPR & CES & MSH, vol. 24, pages 349-402, 04.
- Garibaldi, Pietro, 2006. "Personnel Economics in Imperfect Labour Markets," OUP Catalogue, Oxford University Press, number 9780199280674.
- Alan B. Krueger, 1991.
"The evolution of unjust-dismissal legislation in the United States,"
Industrial and Labor Relations Review,
ILR Review, Cornell University, ILR School, vol. 44(4), pages 644-660, July.
- Alan B. Krueger, 1989. "The Evolution of Unjust-Dismissal Legislation in the United States," NBER Working Papers 3127, National Bureau of Economic Research, Inc.
- Maia Güell, 2000.
"Fixed-Term Contracts and Unemployment: An Efficiency Wage Analysis,"
CEP Discussion Papers
dp0461, Centre for Economic Performance, LSE.
- Maia Güell, 2003. "Fixed-term Contracts and Unemployment: an Efficiency Wage Analysis," Working Papers 18, Barcelona Graduate School of Economics.
- repec:pri:indrel:812 is not listed on IDEAS
- Carlin, Wendy & Soskice, David, 2007. "Reforms, Macroeconomic Policy and Economic Performance in Germany," CEPR Discussion Papers 6415, C.E.P.R. Discussion Papers.
- repec:fth:prinin:433 is not listed on IDEAS
- Hassel, Anke & Rehder, Britta, 2001. "Institutional change in the German wage bargaining system: The role of big companies," MPIfG Working Paper 01/9, Max Planck Institute for the Study of Societies.
- Giuseppe Nicoletti & Andrea Bassanini & Ekkehard Ernst & Sébastien Jean & Paulo Santiago & Paul Swaim, 2001. "Product and Labour Markets Interactions in OECD Countries," OECD Economics Department Working Papers 312, OECD Publishing.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.