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Different paths towards Flexibility, Deregulated employment protection or temporary employment?

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  • Chung, Heejung
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    Abstract

    There are numerous debates on the need to increase flexibility through deregulation of employment protection. Many believe it is essential in generating employment but it is also believed to generate �socially unacceptable� flexible jobs. However, recent studies point to strict regulations on firing permanent workers as the cause of increase in the shares of temporary employment. In other words, stringent protective regulations are not only a source of rigidity, but also force employers to increase flexibility in the labour market through other means. This study explores this hypothesis by examining various aspects of employment protection legislation in concomitance with other competing factors, including structural changes and labour market institutional factors, to explain the cross-national variance of temporary employment across 19 OECD countries using quantitative data. The results show that high cost of firing workers on permanent contracts is the most important factor that explains the high shares of temporary employment. This implies that there are two different ways in which flexibility has been introduced. Either introducing flexibility throughout the labour market using relaxed regulations on firing regular workers, or securing the core workers with high firing cost for regular workers while allowing for flexibility through the use of temporary employment.

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    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 2396.

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    Date of creation: Aug 2005
    Date of revision: Oct 2005
    Handle: RePEc:pra:mprapa:2396

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    Keywords: labour market flexibility; temporary employment; EPL (employment protection legislation); OECD countries; cross-national comparative studies; employment regimes;

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    1. Lawrence M. Kahn, 2006. "The Impact of Employment Protection Mandates on Demographic Temporary Employment Patterns: International Microeconomic Evidence," Working Papers 886, Princeton University, Department of Economics, Industrial Relations Section..
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    13. Lechner, Michael & Pfeiffer, Friedhelm & Spengler, Hannes & Almus, Matthias, 2000. "The impact of non-profit temping agencies on individual labour market success in the West German state of Rhineland-Palatinate," ZEW Discussion Papers 00-02, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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    Cited by:
    1. Chung, Heejung, 2006. "Flexibility, but for whom? : A new approach to examining labour market flexibility across Europe using company level data," MPRA Paper 2397, University Library of Munich, Germany, revised Mar 2007.
    2. Heejung Chung, 2012. "Measuring Flexicurity: Precautionary Notes, a New Framework, and an Empirical Example," Social Indicators Research, Springer, vol. 106(1), pages 153-171, March.

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