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Job Security and Labour Market Flexibility

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  • Seamus Hogan
  • Christopher Ragan

Abstract

This paper discusses the desirability of government-legislated job security. Job security may be beneficial to employed workers, but it can also impose a cost on unemployed workers by lowering labour market turnover and thereby increasing the average duration of unemployment spells. This externality can lead to self-reinforcing behaviour between workers at different firms: If most workers in the economy have job security then turnover will be low and the duration of unemployment following a layoff is likely to be high. As a result, other workers will also desire job security. Even in the absence of legislation, therefore, the externality may result in more job security being provided than is socially desirable.

Suggested Citation

  • Seamus Hogan & Christopher Ragan, 1995. "Job Security and Labour Market Flexibility," Canadian Public Policy, University of Toronto Press, vol. 21(2), pages 174-186, June.
    • Handle: RePEc:cpp:issued:v:21:y:1995:i:2:p:174-186
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    1. repec:eee:labchp:v:3:y:1999:i:pc:p:2985-3028 is not listed on IDEAS

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