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Does employment protection lead to unemployment? A panel data analysis of OECD countries, 1990-2008

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  • Sarkar, Prabirjit

Abstract

This paper analysed the OECD data on employment protection for 23 OECD countries over the time span 1990-2008 on the basis of alternative dynamic panel data models and panel causality tests and examines the validity of the neo-liberal argument that strictness of employment protection hurts labour through increased long-term and youth unemployment rates. While it finds no empirical basis for this orthodox standpoint it observes that long-term unemployment dampens aggregate production which in turn aggravates unemployment problem.

Suggested Citation

  • Sarkar, Prabirjit, 2011. "Does employment protection lead to unemployment? A panel data analysis of OECD countries, 1990-2008," MPRA Paper 35547, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:35547
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    File URL: https://mpra.ub.uni-muenchen.de/35547/1/MPRA_paper_35547.pdf
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    References listed on IDEAS

    as
    1. Dutt, Amitava Krishna, 1984. "Stagnation, Income Distribution and Monopoly Power," Cambridge Journal of Economics, Oxford University Press, vol. 8(1), pages 25-40, March.
    2. Aditya Bhattacharjea, 2006. "Labour Market Regulation and Industrial Performance in India--A Critical Review of the Empirical Evidence," Working papers 141, Centre for Development Economics, Delhi School of Economics.
    3. Simon DEAKIN & Priya LELE & Mathias SIEMS, 2007. "The evolution of labour law: Calibrating and comparing regulatory regimes," International Labour Review, International Labour Organization, pages 133-162.
    4. Simon Deakin & Prabirjit Sarkar, 2008. "Assessing the Long-Run Economic Impact of Labour Law Systems: A theoretical Reappraisal and Analysis of New Time Series Data," Working Papers wp367, Centre for Business Research, University of Cambridge.
    5. Edward F. Blackburne III & Mark W. Frank, 2007. "Estimation of nonstationary heterogeneous panels," Stata Journal, StataCorp LP, vol. 7(2), pages 197-208, June.
    6. Pesaran, M. Hashem & Smith, Ron, 1995. "Estimating long-run relationships from dynamic heterogeneous panels," Journal of Econometrics, Elsevier, vol. 68(1), pages 79-113, July.
    7. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    8. Baker, Dean. & Glyn, Andrew. & Howell, David. & Schmitt, John., 2004. "Unemployment and labour market institutions : the failure of the empirical case for deregulation," ILO Working Papers 993741243402676, International Labour Organization.
    9. Sarkar, Prabirjit, 2011. "Indian Labour Regulation and Its Impact on Unemployment: A Leximetric Study, 1970-2006," MPRA Paper 32929, University Library of Munich, Germany.
    10. Danielle Venn, 2009. "Legislation, Collective Bargaining and Enforcement: Updating the OECD Employment Protection Indicators," OECD Social, Employment and Migration Working Papers 89, OECD Publishing.
    11. Steindl, Josef, 1979. "Stagnation Theory and Stagnation Policy," Cambridge Journal of Economics, Oxford University Press, vol. 3(1), pages 1-14, March.
    12. Prabirjit Sarkar, 1993. "Distribution and Growth: A Critical Note on "Stagnationism"," Review of Radical Political Economics, Union for Radical Political Economics, vol. 25(1), pages 62-70, March.
    13. repec:ilo:ilowps:374124 is not listed on IDEAS
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    More about this item

    Keywords

    labour law; regular job protection; temporary job protection; unemployment rate; long-term unemployment; youth unemployment;

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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