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Does Job Security Hamper Employment Prospects?

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Abstract

We investigate the effect of employment protection legislation (EPL) on the propensity to hire workers from unemployment and active labor market programs (ALMPs), utilizing a reform that decreased dismissal costs for small firms only. Using administrative data from Sweden, we find that less stringent EPL increased the share of workers hired from unemployment and some ALMPs. Our results suggest that there was less screening of new hires after the reform, and that liberalization of EPL mitigates the stigma associated with unemployment and participation in ALMPs.

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  • Bjuggren, Carl Magnus & Skedinger, Per, 2018. "Does Job Security Hamper Employment Prospects?," Working Paper Series 1255, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:1255
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    1. Butschek, Sebastian & Sauermann, Jan, 2019. "The Effect of Employment Protection on Firms' Worker Selection," IZA Discussion Papers 12305, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Employment protection; Active labor market programs; Unemployment;
    All these keywords.

    JEL classification:

    • H80 - Public Economics - - Miscellaneous Issues - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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