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The Economics of Employment Protection

Author

Listed:
  • Addison, John T.

    () (University of South Carolina)

  • Teixeira, Paulino

    () (University of Coimbra)

Abstract

Empirical investigation of the labor market consequences of employment protection has mushroomed since Lazear’s (1990) pioneering study. Having sketched the theoretical background, we chart the course of the modern empirical literature. We focus mainly on dismissals protection, distinguishing between the themes of employment and unemployment development and labor market dynamics proper. Our discussion of employment and unemployment largely deals with the effect of employment protection on levels of these outcome indicators. We distinguish between overall and compositional effects (e.g., by demographic group and type of contract), between developing and industrialized nations, and identify some key control variables. Our discussion of labor market dynamics focuses on the speed of adjustment issue and on gross flows. It also formalizes the link between analyses of levels and changes in variables. At all times potential offsets to the adverse effects of employment protection receive consideration.

Suggested Citation

  • Addison, John T. & Teixeira, Paulino, 2001. "The Economics of Employment Protection," IZA Discussion Papers 381, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp381
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    References listed on IDEAS

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    More about this item

    Keywords

    employment adjustment; Severance pay; employment protection indices; labor standards; employment; unemployment; gross flows;

    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
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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