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Employment protection legislation and labor court activity in Spain

Listed author(s):
  • Juan F. Jimeno

    ()

    (Banco de España)

  • Marta Martínez-Matute

    ()

    (Banco de España)

  • Juan S. Mora-Sanguinetti

    ()

    (Banco de España)

Labor courts may introduce a significant wedge between “legal” firing costs and “effective” (post-trial) firing costs. Apart from procedural costs, there is uncertainty over judges’ rulings, in particular over the likelihood of a “fair” dismissal ultimately being ruled as “unfair”, which may increase firing costs significantly. In 2010 and 2012, reforms of Employment Protection Legislation widened the definition of fair economic dismissals in Spain. In this paper we look at Labor Court rulings on dismissals across Spanish provinces before and after the EPL reforms (2004-2014). We make this comparison taking into account a set of co-variates (local labor market conditions, characteristics of the Labor Courts, pre-trial conciliations, congestion of Labor Courts) which may determine the selection of dismissal cases ruled by Labor Courts. Our results suggest that, despite the 2010 and 2012 EPL reforms, the proportion of economic redundancies being ruled as fair by Labor Courts has not substantially increased, although it is now less negatively associated with the local unemployment rate than in the pre-reform period.

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File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/15/Fich/dt1507e.pdf
File Function: First version, March 2015
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Paper provided by Banco de España & Working Papers Homepage in its series Working Papers with number 1507.

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Length: 49 pages
Date of creation: Mar 2015
Handle: RePEc:bde:wpaper:1507
Contact details of provider: Web page: http://www.bde.es/

Web page: http://www.bde.es/bde/en/secciones/informes/Publicaciones_se/docs/
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  1. Ioana Marinescu, 2011. "Are Judges Sensitive to Economic Conditions? Evidence from Uk Employment Tribunals," ILR Review, Cornell University, ILR School, vol. 64(4), pages 673-698, July.
  2. Samuel Bentolila & Juan Dolado & Juan Jimeno, 2012. "Reforming an insider-outsider labor market: the Spanish experience," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-29, December.
  3. Decio Coviello & Andrea Ichino & Nicola Persico, 2014. "Time Allocation and Task Juggling," American Economic Review, American Economic Association, vol. 104(2), pages 609-623, February.
  4. Juan S. Mora-Sanguinetti & Nuno Garoupa, 2015. "Litigation in Spain 2001-2010: Exploring the market for legar services," Working Papers 1505, Banco de España;Working Papers Homepage.
  5. Miguel García-Posada & Juan Mora-Sanguinetti, 2015. "Does (average) size matter? Court enforcement, business demography and firm growth," Small Business Economics, Springer, vol. 44(3), pages 639-669, March.
  6. Ángel L. Martín Román & Alfonso Moral de Blas & Marta Martínez Matute, 2013. "Tipo de juez y estimación de los casos de despido: un análisis de los Juzgados de lo Social en España," Cuadernos de Economía - Spanish Journal of Economics and Finance, ELSEVIER, vol. 36(102), pages 142-154, Diciembre.
  7. James Costain & Juan F. Jimeno & Carlos Thomas, 2010. "Employment fluctuations in a dual labour market," Economic Bulletin, Banco de España;Economic Bulletin Homepage, issue APR, April.
  8. Berger, Helge & Neugart, Michael, 2011. "Labor courts, nomination bias, and unemployment in Germany," European Journal of Political Economy, Elsevier, vol. 27(4), pages 659-673.
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