Labor Conflict at the Workplace: Do Dismissal Regulations Matter?

Using data on more than 13000 European establishments over the 2009-2013 period, I analyze the relationship between discharge regulation and industrial actions. I introduce a simple theoretical framework allowing for both positive and negative effects of dismissal constraints on the occurrence of labor disputes, and empirically answer the question as whether stricter dismissal laws make EU establishments experience more frequent and intense industrial actions (work-to-rule, strikes and occupation). I find that a change from employment at-will to a regime with very strict dismissal constraints is associated with an increase in the likelihood of observing an industrial action at the establishment-level ranging between 10.5 and 14.8 percentage points, and that this effect reduces to around 6.7 percentage points when only company-specific industrial actions are considered. Discharge constraints effects on industrial actions are then confirmed through a difference-in-differences analysis, by exploiting quasi-experimental variations in national dismissal regulations. My findings show that less strict discharge regulations moderate labor conflicts in EU establishments, by disciplining workers and restraining unions' activism.