Labour protection and productivity in the European economies: 1995-2005
The present study examines cross-national and sectoral differences in multifactor productivity growth in sixteen European countries from 1995 to 2005. The main aim is to ascertain the role of flexible employment contracts and collective labour relationships in explaining the ample differentials recorded in the European economy. Research Findings We use the EU KLEMS database for growth accounting and a broad set of indicators of labour regulations, covering two distinct ‘areas’ of labour regulation: employment laws and collective relations laws. This comprehensive approach allow us to consider arrangements that regulate allocation of labour inputs (fixed-term, part-time contracts, hours worked) and of payoff and decision rights of employees. We find that, since 1995, European countries have not followed similar patterns of growth. A large number of variations between European economies are caused by deep differentials in multifactor productivity and part of this heterogeneity is caused by sectoral diversities. We show that, in labour-intensive sectors such as services, fixed-term contracts, which imply shorter-term jobs and lower employment tenures, may discourage investment in skills and have detrimental effects on multifactor productivity increases. We also find that some forms of labour regulation and arrangements that give a ‘voice’ to employees mitigate these perverse effects on efficiency patterns. Employment protection reforms which slacken the rules of fixed-term contracts cause potential drawbacks in terms of low productivity gains. More stringent regulation of these practices, as well as a climate of collective relations, sustain long-term relationships and mitigate these negative effects.
|Date of creation:||13 Jan 2009|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nickell, S. & Layard, R., 1997.
"Labour Market Institutions and Economic Performance,"
23, Centre for Economic Performance & Institute of Economics.
- Nickell, Stephen & Layard, Richard, 1999. "Labor market institutions and economic performance," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 46, pages 3029-3084 Elsevier.
- Richard Layard & Stephen Nickell, 1998. "Labour Market Institutions and Economic Performance," CEP Discussion Papers dp0407, Centre for Economic Performance, LSE.
- Goux, Dominique & Maurin, Eric & Pauchet, Marianne, 2001.
"Fixed-term contracts and the dynamics of labour demand,"
European Economic Review,
Elsevier, vol. 45(3), pages 533-552, March.
- Dominique Goux & Eric Maurin & Marianne Pauchet, 1999. "Fixed-term Contracts and the Dynamics of Labour Demand," Working Papers 99-02, Centre de Recherche en Economie et Statistique.
- David H. Autor & William R. Kerr & Adriana D. Kugler, 2007.
"Do Employment Protections Reduce Productivity? Evidence from U.S. States,"
Harvard Business School Working Papers
07-048, Harvard Business School.
- Autor, David & Kerr, William & Kugler, Adriana, 2007. "Do Employment Protections Reduce Productivity? Evidence from U.S. States," IZA Discussion Papers 2571, Institute for the Study of Labor (IZA).
- William Kerr & Adriana Kugler & David Autor, 2007. "Do Employment Protections Reduce Productivity? Evidence from U.S. States," Working Papers 07-04, Center for Economic Studies, U.S. Census Bureau.
- David H. Autor & William R. Kerr & Adriana D. Kugler, 2007. "Do Employment Protections Reduce Productivity? Evidence from U.S. States," NBER Working Papers 12860, National Bureau of Economic Research, Inc.
- Maia Güell, 2000.
"Fixed-Term Contracts and Unemployment: An Efficiency Wage Analysis,"
CEP Discussion Papers
dp0461, Centre for Economic Performance, LSE.
- Maia Güell, 2003. "Fixed-term Contracts and Unemployment: an Efficiency Wage Analysis," Working Papers 18, Barcelona Graduate School of Economics.
- Maia Guell, 2000. "Fixed-term contracts and unemployment: an efficiency wage analysis," LSE Research Online Documents on Economics 20181, London School of Economics and Political Science, LSE Library.
- Carlin, Wendy & Soskice, David, 2007. "Reforms, Macroeconomic Policy and Economic Performance in Germany," CEPR Discussion Papers 6415, C.E.P.R. Discussion Papers.
- Alan B. Krueger, 1991.
"The Evolution of Unjust-Dismissal Legislation in the United States,"
Cornell University, ILR School, vol. 44(4), pages 644-660, July.
- Alan B. Krueger, 1989. "The Evolution of Unjust-Dismissal Legislation in the United States," NBER Working Papers 3127, National Bureau of Economic Research, Inc.
- Schivardi, Fabiano & Torrini, Roberto, 2005.
"Identifying the Effects of Firing Restrictions Through Size-Contingent Differences in Regulation,"
CEPR Discussion Papers
5303, C.E.P.R. Discussion Papers.
- Schivardi, Fabiano & Torrini, Roberto, 2008. "Identifying the effects of firing restrictions through size-contingent differences in regulation," Labour Economics, Elsevier, vol. 15(3), pages 482-511, June.
- Michele Belot & Jan Boone & Jan Van Ours, 2007.
"Welfare-Improving Employment Protection,"
London School of Economics and Political Science, vol. 74(295), pages 381-396, 08.
- Michele Belot & Jan Boone & Jan van Ours, 2004. "Welfare Improving Employment Protection," DEGIT Conference Papers c009_004, DEGIT, Dynamics, Economic Growth, and International Trade.
- Belot, M.V.K. & Boone, J. & van Ours, J.C., 2007. "Welfare improving employment protection," Other publications TiSEM eee2f823-1384-4a2f-a4eb-7, Tilburg University, School of Economics and Management.
- Bassanini, Andrea & Nunziata, Luca & Venn, Danielle, 2008.
"Job Protection Legislation and Productivity Growth in OECD Countries,"
IZA Discussion Papers
3555, Institute for the Study of Labor (IZA).
- Andrea Bassanini & Luca Nunziata & Danielle Venn, 2009. "Job protection legislation and productivity growth in OECD countries," Economic Policy, CEPR;CES;MSH, vol. 24, pages 349-402, 04.
- Engellandt, Axel & Riphahn, Regina T., 2003.
"Temporary Contracts and Employee Effort,"
IZA Discussion Papers
780, Institute for the Study of Labor (IZA).
- Juan José Dolado & Carlos García-Serrano & Juan F. Jimeno, .
"Drawing Lessons from the Boom of Temporary Jobs in Spain,"
- Juan J Dolado & Carlos Garcia--Serrano & Juan F. Jimeno, 2002. "Drawing Lessons From The Boom Of Temporary Jobs In Spain," Economic Journal, Royal Economic Society, vol. 112(721), pages F270-F295, June.
- Dolado, Juan J. & Garcia-Serrano, Carlos & Jimeno, Juan F, 2001. "Drawing Lessons From the Boom of Temporary Jobs in Spain," CEPR Discussion Papers 2884, C.E.P.R. Discussion Papers.
- Hopenhayn, Hugo & Rogerson, Richard, 1993. "Job Turnover and Policy Evaluation: A General Equilibrium Analysis," Journal of Political Economy, University of Chicago Press, vol. 101(5), pages 915-38, October.
- Bertola, Giuseppe, 1994.
"Flexibility, investment, and growth,"
Journal of Monetary Economics,
Elsevier, vol. 34(2), pages 215-238, October.
- Ian Dew-Becker & Robert J. Gordon, 2008.
"The Role of Labor Market Changes in the Slowdown of European Productivity Growth,"
NBER Working Papers
13840, National Bureau of Economic Research, Inc.
- Dew-Becker, Ian & Gordon, Robert J, 2008. "The Role of Labour Market Changes in the Slowdown of European Productivity Growth," CEPR Discussion Papers 6722, C.E.P.R. Discussion Papers.
- Tito Boeri & Pietro Garibaldi, 2007.
"Two Tier Reforms of Employment Protection: a Honeymoon Effect?,"
Royal Economic Society, vol. 117(521), pages 357-385, 06.
- Tito Boeri & Pietro Garibaldi, 2007. "Two Tier Reforms of Employment Protection: A Honeymoon Effect?," Carlo Alberto Notebooks 37, Collegio Carlo Alberto.
- Olivier Blanchard & Augustin Landier, 2001. "The Perverse Effects of Partial Labor Market Reform: Fixed Duration Contracts in France," NBER Working Papers 8219, National Bureau of Economic Research, Inc.
- Giuseppe Nicoletti & Andrea Bassanini & Ekkehard Ernst & Sébastien Jean & Paulo Santiago & Paul Swaim, 2001. "Product and Labour Markets Interactions in OECD Countries," OECD Economics Department Working Papers 312, OECD Publishing.
- Hassel, Anke & Rehder, Britta, 2001. "Institutional change in the German wage bargaining system: The role of big companies," MPIfG Working Paper 01/9, Max Planck Institute for the Study of Societies.
- Garibaldi, Pietro, 2006. "Personnel Economics in Imperfect Labour Markets," OUP Catalogue, Oxford University Press, number 9780199280674, December.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:12710. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.