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Shortening the Tenure Clock: the Impact of Strengthened U.K. Job Security Legislation

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  • Ioana Marinescu

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Abstract

This paper uses the fact that firing costs are tenure dependent to analyze their effect on turnover and productivity. I exploit a 1999 British reform that lowered from two to one year the tenure necessary for a worker to be able to sue their employer for unfair dismissal. Empirical results show a roughly 30% decrease in the firing hazard for workers with zero to two years of tenure relative to workers with higher tenure. Training increased after the reform, unemployment duration decreased, and wages were unaffected. Theory suggests that the decrease in firing for low tenure workers is mainly due to a sizeable increase in the quality of recruitment.

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File URL: http://www.uu.nl/faculty/leg/NL/organisatie/departementen/departementeconomie/onderzoek/publicaties/DParchive/2007/Documents/07-04.pdf
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Bibliographic Info

Paper provided by Utrecht School of Economics in its series Working Papers with number 07-04.

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Length: 80 pages
Date of creation: Mar 2007
Date of revision:
Handle: RePEc:use:tkiwps:0704

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Related research

Keywords: Firing Costs; Separation Hazard Rate; Learning; Job Tenure;

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Cited by:
  1. Pinoli, Sara, 2007. "Employment Protection and Labor Productivity: Positive or Negative?," MPRA Paper 11775, University Library of Munich, Germany.
  2. Kahn, Lawrence M., 2007. "Employment Protection Reforms, Employment and the Incidence of Temporary Jobs in Europe: 1995–2001," IZA Discussion Papers 3241, Institute for the Study of Labor (IZA).
  3. Pedro S. Martins, 2008. "Dismissals for cause: The difference that just eight paragraphs can make," Working Papers 24, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
  4. Kahn, Lawrence M., 2010. "Employment protection reforms, employment and the incidence of temporary jobs in Europe: 1996-2001," Labour Economics, Elsevier, vol. 17(1), pages 1-15, January.
  5. Jones, Michael D., 2012. "How do Teachers Respond to Tenure?," MPRA Paper 43893, University Library of Munich, Germany.

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