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The Effect of Dismissals Protection on Employment: More on a Vexed Theme

Author

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  • John T. Addison
  • Paulino Teixeira
  • Jean‐Luc Grosso

Abstract

This paper presents new results on the relationship between severance pay and labor market performance for a sample of 21 OECD countries, 1956‐1984. Specifically, it evaluates Lazear's empirical argument that severance pay reduces employment and elevates joblessness. His findings are shown not to survive correction for errors in the data and the application of correct estimation procedures. Furthermore, adverse labor market consequences of severance pay are not detected in a dynamic characterization of the Lazear model. Limitations of the approach followed here are also addressed and contextualized.

Suggested Citation

  • John T. Addison & Paulino Teixeira & Jean‐Luc Grosso, 2000. "The Effect of Dismissals Protection on Employment: More on a Vexed Theme," Southern Economic Journal, John Wiley & Sons, vol. 67(1), pages 105-122, July.
    • Handle: RePEc:wly:soecon:v:67:y:2000:i:1:p:105-122
    DOI: 10.1002/j.2325-8012.2000.tb00323.x
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    References listed on IDEAS

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    1. Bertola, Giuseppe, 1990. "Job security, employment and wages," European Economic Review, Elsevier, vol. 34(4), pages 851-879, June.
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    10. repec:fth:prinin:390 is not listed on IDEAS
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    12. Addison, John T. & Teixeira, Paulino, 1999. "Is Portugal really so arteriosclerotic? Results from a cross-country analysis of labor adjustment," ZEW Discussion Papers 99-30, ZEW - Leibniz Centre for European Economic Research.
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    Cited by:

    1. Simon Deakin & Kamelia Pourkermani, 2026. "The Effects of Labour Laws on Productivity, Employment, Unemployment and the Labour Share of National Income: Analysis of New Evidence from the Cambridge Leximetric Database, with a UK-China Comparison," Working Papers wp547, Centre for Business Research, University of Cambridge.
    2. John Addison & Paulino Teixeira, 2005. "What Have We Learned about the Employment Effects of Severance Pay? Further Iterations of Lazear Et al," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(3), pages 345-368, September.
    3. Addison, John T. & Teixeira, Paulino, 2001. "Employment Adjustment in Portugal: Evidence from Aggregate and Firm Data," IZA Discussion Papers 391, IZA Network @ LISER.
    4. James J. Heckman & Carmen Pagés, 2004. "Law and Employment: Lessons from Latin America and the Caribbean," NBER Books, National Bureau of Economic Research, Inc, number heck04-1, January.

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