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Last in, first out?: Estimating the effect of seniority rules in Sweden

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  • von Below, David
  • Thoursie, Peter Skogman

Abstract

In this paper we investigate whether a relaxation in seniority rules (the "last-in-first-out" principle) had any effect on firms' employment behaviour. Seniority rules exist in several countries, but consequences of seniority rules on firms' employment behaviour have not been examined previously. The "last-in-first-out" principle in Sweden was reformed in January 2001 such that employers with ten or fewer employees were allowed to exempt two workers from the seniority rule. Using an employer-employee unbalanced panel data for the period 1996-2005, we find that both hires and separations increased in small firms relative to large firms by 5%. This also implies that there were no effects on firms' net employment. Our results show that firms reacted to changes in the seniority rules, but we argue that the effects are not overwhelmingly large.

Suggested Citation

  • von Below, David & Thoursie, Peter Skogman, 2010. "Last in, first out?: Estimating the effect of seniority rules in Sweden," Labour Economics, Elsevier, vol. 17(6), pages 987-997, December.
  • Handle: RePEc:eee:labeco:v:17:y:2010:i:6:p:987-997
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    Cited by:

    1. 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.
    2. Olsson, Martin, 2013. "Employment Protection and Parental Child Care," Working Paper Series 952, Research Institute of Industrial Economics.
    3. Fredrik Heyman & Per Skedinger, 2016. "Employment Protection Reform, Enforcement in Collective Agreements and Worker Flows," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 55(4), pages 662-704, October.
    4. Bjuggren, Carl Magnus, 2018. "Employment protection and labor productivity," Journal of Public Economics, Elsevier, vol. 157(C), pages 138-157.
    5. John Martin & Stefano Scarpetta, 2012. "Setting It Right: Employment Protection, Labour Reallocation and Productivity," De Economist, Springer, vol. 160(2), pages 89-116, June.
    6. Heggebø, Kristian, 2015. "Unemployment in Scandinavia during an economic crisis: Cross-national differences in health selection," Social Science & Medicine, Elsevier, vol. 130(C), pages 115-124.
    7. Martin Andersson & Steven Klepper, 2013. "Characteristics and performance of new firms and spinoffs in Sweden," Industrial and Corporate Change, Oxford University Press, vol. 22(1), pages 245-280, February.
    8. Aida Caldera Sánchez & Alain de Serres & Naomitsu Yashiro, 2016. "Reforming in a difficult macroeconomic context: A review of the issues and recent literature," OECD Economics Department Working Papers 1297, OECD Publishing.
    9. Skedinger, Per, 2011. "Employment Consequences of Employment Protection Legislation," Working Paper Series 865, Research Institute of Industrial Economics.
    10. Bassanini, Andrea & Garnero, Andrea, 2013. "Dismissal protection and worker flows in OECD countries: Evidence from cross-country/cross-industry data," Labour Economics, Elsevier, vol. 21(C), pages 25-41.
    11. Christl, Michael & Kucsera, Dénes & Lorenz, Hanno, 2015. "Jung, älter, arbeitslos? Wie Ältere länger in Beschäftigung gehalten werden können, ohne die Jungen in die Arbeitslosigkeit zu treiben," EconStor Research Reports 119605, ZBW - German National Library of Economics.
    12. Bjuggren, Carl Magnus, 2015. "Sensitivity to shocks and implicit employment protection in family firms," Journal of Economic Behavior & Organization, Elsevier, vol. 119(C), pages 18-31.
    13. repec:eee:irlaec:v:54:y:2018:i:c:p:1-16 is not listed on IDEAS
    14. repec:wsi:jicepx:v:08:y:2017:i:01:n:s1793993317500028 is not listed on IDEAS
    15. Ulku,Hulya & Muzi,Silvia, 2015. "Labor market regulations and outcomes in Sweden : a comparative analysis of recent trends," Policy Research Working Paper Series 7229, The World Bank.
    16. von Below, David & Thoursie, Peter Skogman, 2010. "Last in, first out?: Estimating the effect of seniority rules in Sweden," Labour Economics, Elsevier, vol. 17(6), pages 987-997, December.

    More about this item

    Keywords

    Employment protection Employment change Hires Separations;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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