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Employment and Output Adjustment in the OECD: A Disaggregate Analysis of the Role of Job Security Provisions

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  • Burgess, Simon
  • Knetter, Michael
  • Michelacci, Claudio

Abstract

Job security provisions are frequently cited as inhibiting the functioning of labour markets in Europe. However, as with many forms of non-price regulation, it is difficult to assess how tightly these regulations bind and influence labour market outcomes. We use an industry-country panel of OECD countries over 20 years to estimate adjustment paths for employment and output conditional on wages, the capital stock and exchange rates. We find that job security provisions are correlated with the speed of adjustment of employment and output (restrictive legislation slowing adjustment down), and that controlling for industry effects is important in isolating this effect. Copyright 2000 by The London School of Economics and Political Science

Suggested Citation

  • Burgess, Simon & Knetter, Michael & Michelacci, Claudio, 2000. "Employment and Output Adjustment in the OECD: A Disaggregate Analysis of the Role of Job Security Provisions," Economica, London School of Economics and Political Science, vol. 67(267), pages 419-435, August.
  • Handle: RePEc:bla:econom:v:67:y:2000:i:267:p:419-35
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    Cited by:

    1. 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, April.
    2. Caballero, Ricardo J. & Cowan, Kevin N. & Engel, Eduardo M.R.A. & Micco, Alejandro, 2013. "Effective labor regulation and microeconomic flexibility," Journal of Development Economics, Elsevier, vol. 101(C), pages 92-104.
    3. Ricardo Caballero & Eduardo Engel & Alejandro Micco, 2005. "Microeconomic Flexibility in Latin America," Central Banking, Analysis, and Economic Policies Book Series,in: Jorge Restrepo & Andrea Tokman R. & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Edi (ed.), Labor Markets and Institutions, edition 1, volume 8, chapter 10, pages 329-366 Central Bank of Chile.
    4. repec:eee:labeco:v:51:y:2018:i:c:p:48-62 is not listed on IDEAS
    5. Melanie Ward-Warmedinger & Corrado Macchiarelli, 2013. "Transitions in labour market status in the European Union," Europe in Question Discussion Paper Series of the London School of Economics (LEQs) 9, London School of Economics / European Institute.
    6. Heshmati Almas & Karlson Nils & Box Marcus, 2013. "Generality, State Neutrality and Unemployment in the OECD," Global Economy Journal, De Gruyter, vol. 13(3-4), pages 333-358, December.
    7. Ariga, Kenn & Kambayashi, Ryo, 2010. "Employment and wage adjustments at firms under distress in Japan: An analysis based upon a survey," Journal of the Japanese and International Economies, Elsevier, vol. 24(2), pages 213-235, June.
    8. Gianluca Grimalda, 2016. "Can labour market rigidity foster economic efficiency? A model with non-general purpose technical change," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 6(1), pages 79-99, April.
    9. Inklaar, Robert & Timmer, Marcel P., 2006. "Resurgence of employment growth in the European Union: The role of cycles and labour market reforms," Economics Letters, Elsevier, vol. 91(1), pages 61-66, April.
    10. Per Skedinger, 2010. "Employment Protection Legislation," Books, Edward Elgar Publishing, number 13686.
    11. Böckerman, Petri & Skedinger, Per & Uusitalo, Roope, 2018. "Seniority rules, worker mobility and wages: Evidence from multi-country linked employer-employee data," Labour Economics, Elsevier, vol. 51(C), pages 48-62.
    12. Addison, John T. & Teixeira, Paulino, 2004. "The Effect of Worker Representation on Employment Behavior in Germany: Another Case of -2.5%," IZA Discussion Papers 1188, Institute for the Study of Labor (IZA).
    13. Melanie Ward-Warmedinger & Corrado Macchiarelli, 2014. "Transitions in labour market status in EU labour markets," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-25, December.
    14. Victor Aguirregabiria & Cesar Alonso-Borrego, 2014. "Labor Contracts And Flexibility: Evidence From A Labor Market Reform In Spain," Economic Inquiry, Western Economic Association International, vol. 52(2), pages 930-957, April.
    15. Tangian, Andranik, 2008. "Towards Consistent Principles of Flexicurity," WSI Working Papers 159, The Institute of Economic and Social Research (WSI), Hans-Böckler-Foundation.
    16. John T. Addison & Paulino Teixeira, 2005. "The Effect of Works Councils on Employment Change," GEMF Working Papers 2005-06, GEMF, Faculty of Economics, University of Coimbra.
    17. Tomohiko Noda, 2013. "Determinants of the Timing of Downsizing Among Large Japanese Firms: Long-Term Employment Practices and Corporate Governance," The Japanese Economic Review, Japanese Economic Association, vol. 64(3), pages 363-398, September.
    18. John T. Addison & Paulino Teixeira, 2003. "The Economics of Employment Protection," Journal of Labor Research, Transaction Publishers, vol. 24(1), pages 85-129, January.
    19. Selçuk GÜL, 2013. "Institutional Rigidities and Their Effects on Labor Demand in Turkey," Sosyoekonomi Journal, Sosyoekonomi Society, issue 20(20).
    20. Dutta Roy, Sudipta, 2004. "Employment dynamics in Indian industry: adjustment lags and the impact of job security regulations," Journal of Development Economics, Elsevier, vol. 73(1), pages 233-256, February.
    21. Andrea Bassanini & Danielle Venn, 2008. "The Impact of Labour Market Policies on Productivity in OECD Countries," International Productivity Monitor, Centre for the Study of Living Standards, vol. 17, pages 3-15, Fall.
    22. Noda, Tomohiko & Hirano, Daisuke, 2013. "Enterprise unions and downsizing in Japan before and after 1997," Journal of the Japanese and International Economies, Elsevier, vol. 28(C), pages 91-118.
    23. Christine Mayrhuber, 2000. "Severance Payment and New Severance Payment Scheme: New Momentum or Obstacle for the Austrian Labour Market?," WIFO Monatsberichte (monthly reports), WIFO, vol. 73(12), pages 737-746, December.

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