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Employment Protection Legislation and the IT-Sector in OECD Countries


  • José E. Galdón-Sánchez


This paper explores the relationship between employment protection legislation (EPL) and the share of employment in the IT-sector. Evidence from several OECD countries suggests that the importance of the IT-sector is smaller in economies with high levels of EPL than in economies with low levels. This shows up in the amount of resources dedicated to research on IT as well as in the share of employment in the sector. A simple model is provided to explain these facts. EPL affects both labor supply and labor demand in the same way resulting in lower employment equilibrium levels.
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Suggested Citation

  • José E. Galdón-Sánchez, 2002. "Employment Protection Legislation and the IT-Sector in OECD Countries," Recherches économiques de Louvain, De Boeck Université, vol. 68(1), pages 169-184.
  • Handle: RePEc:cai:reldbu:rel_681_0169

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    References listed on IDEAS

    1. Saint-Paul, Gilles, 2002. "Employment protection, international specialization, and innovation," European Economic Review, Elsevier, vol. 46(2), pages 375-395, February.
    2. Timothy Dunne & Mark J. Roberts & Larry Samuelson, 1989. "The Growth and Failure of U. S. Manufacturing Plants," The Quarterly Journal of Economics, Oxford University Press, vol. 104(4), pages 671-698.
    3. Edward P. Lazear, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, Oxford University Press, vol. 105(3), pages 699-726.
    4. Samuel Bentolila & Giuseppe Bertola, 1990. "Firing Costs and Labour Demand: How Bad is Eurosclerosis?," Review of Economic Studies, Oxford University Press, vol. 57(3), pages 381-402.
    5. E. Galdon-Sanchez, Jose & Guell, Maia, 2003. "Dismissal conflicts and unemployment," European Economic Review, Elsevier, vol. 47(2), pages 323-335, April.
    6. Christopher A. Pissarides, 1992. "Loss of Skill During Unemployment and the Persistence of Employment Shocks," The Quarterly Journal of Economics, Oxford University Press, vol. 107(4), pages 1371-1391.
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    Cited by:

    1. Alejandro Cuñat & Marc J. Melitz, 2012. "Volatility, Labor Market Flexibility, And The Pattern Of Comparative Advantage," Journal of the European Economic Association, European Economic Association, vol. 10(2), pages 225-254, April.

    More about this item

    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights


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