Does Deregulation Work? Reassessing the Unemployment Effects of Employment Protection

Sabina Avdagic

112 citations0/0 files storedBritish Journal of Industrial Relations

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Labor market dynamics and wage inequality Employment, Labor, and Gender Studies Unemployment and Economic Growth

Abstract

Abstract Using new data, this article examines the effect of employment protection legislation (EPL) on aggregate and youth unemployment in advanced economies and Central and Eastern Europe during 1980–2009. The results offer no clear support for the argument that EPL is a cause of unemployment. Although EPL reaches statistical significance at conventional levels in some models, the results are sensitive to small changes in the sample or the use of alternative estimators. While the analysis suggests some scope for complementary reforms of EPL and the tax wedge in tackling youth unemployment, the findings on the whole indicate that government efforts to tackle unemployment by deregulating EPL alone may well be futile.

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References

1991Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations 1981Biases in Dynamic Models with Fixed Effects 1999A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test 1995What To Do (and Not to Do) with Time-Series Cross-Section Data 1989The Comparative Method: Moving Beyond Qualitative and Quantitative Strategies 1992Unemployment: macroeconomic performance and the labour market 2004The Regulation of Labor 2000The Role of Shocks and Institutions in the Rise of European Unemployment: the Aggregate Evidence

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