The Effects of Employment Protection legislationon Personnel Policies: A Review of Theoretical Modelsand Empirical results

2014 ◽  
pp. 126-140
Author(s):  
O. Mironenko
Keyword(s):  
Personnel Selection ◽  
Selection Criteria ◽  
Theoretical Models ◽  
Employment Protection ◽  
Empirical Results ◽  
Protection Legislation ◽  
Labour Contracts ◽  
Hiring And Firing ◽  
The Impact ◽  
Personnel Policies

Employers incur costs while fulfilling the requirements of employment protection legislation. The article contains a review of the core theoretical models and empirical results concerning the impact of these costs on firms’ practices in hiring, firing, training and remuneration. Overall, if wages are flexible or enforcement is weak, employment protection does not significantly influence employers’ behavior. Otherwise, stringent employment protection results in the reduction of hiring and firing rates, changes in personnel selection criteria, types of labour contracts and dismissal procedures, and, in some cases, it may lead to the growth of wages and firms’ investments to human capital.

scholarly journals Employment protection legislation and SME performance

2016 ◽  
Vol 35 (3) ◽  
pp. 306-326 ◽  
Author(s):  
Yannick Van Landuyt ◽  
Nico Dewaelheyns ◽  
Cynthia Van Hulle
Keyword(s):  
Employment Protection ◽  
Blue Collar ◽  
Employment Protection Legislation ◽  
Temporary Workers ◽  
Firing Costs ◽  
Protection Legislation ◽  
Labour Contracts ◽  
Improved Performance ◽  
Hiring And Firing ◽  
Country Specific

This article examines the effect of employment protection legislation (EPL) on small and medium-sized enterprise (SME) performance. Rather than relying on country-specific proxies for EPL, as is common in the literature, we compute firm-specific measures of a firm’s exposure to EPL by using a panel dataset of 13,112 Belgian SMEs for the period between 2000 and 2009. The empirical results show that firms perform better when faced with lower hiring and firing costs through the use of more blue-collar labour contracts. The evidence showing improved performance by firms that attempt to achieve greater flexibility by hiring more temporary workers is limited.

How does employment protection legislation influence hiring and firing decisions by the smallest firms?

2013 ◽  
Vol 121 (3) ◽  
pp. 444-448 ◽  
Author(s):  
Ana Millán ◽  
José María Millán ◽  
Concepción Román ◽  
André van Stel
Keyword(s):  
Employment Protection ◽  
Employment Protection Legislation ◽  
Protection Legislation ◽  
Hiring And Firing

scholarly journals Importance of Employment Protection and Types of Employment Contracts for Elasticity of Employment in the OECD Countries

2014 ◽  
Vol 17 (1) ◽  
pp. 21-44
Author(s):  
Eugeniusz Kwiatkowski ◽  
Przemysław Włodarczyk
Keyword(s):  
Labour Market ◽  
Economic Crisis ◽  
Oecd Countries ◽  
Employment Protection ◽  
Employment Protection Legislation ◽  
Real Wages ◽  
Market Institutions ◽  
Employment Contracts ◽  
Protection Legislation ◽  
The Impact

This article presents the impact of the global crisis on employment in the OECD countries, and in particular is an attempt to explain why the impact is of a different scope in particular countries. Particular attention has been paid to the question of the role played by labour market institutions (such as employment protection legislation and fixed-term employment). The global economic crisis has influenced the situation in the labour markets of OECD countries, causing declines in employment and increases in unemployment. Changes in the level of employment in individual countries varied. Between 2007-2012 declines in production took place in the majority of OECD countries. Declines in real wages were also observed in those countries. On the other hand, in the period of 2005-2012 relatively small changes in labour market institutions occurred. With respect to both the stringency of employment protection legislation, as well as the share of fixed-term employment, there were no clearly visible trends in the data during the period of economic crisis. The econometric verification of theoretical hypotheses was performed using annual data from the 2005-2012 period for 26 OECD countries, and it shows that GDP and real wages were statistically significant determinants of employment size in the analyzed period. The study also confirmed the hypothesis of the existence of a non-linear (U-shaped) relationship between employment elasticity with respect to GDP and the level of stringency of employment protection legislation, as well as the share of fixed-term employment in the total number of employment contracts. The results show that the smallest declines in employment during a crisis might be expected in countries where the level of EPL is close to 2, and the share of fixed-term employment in the total number of employment contracts is close to 18%.

scholarly journals Labour Market Regulations and Capital Intensity

2018 ◽  
Author(s):  
Gilbert Cette ◽  
Jimmy Lopez ◽  
Jacques Mairesse
Keyword(s):  
Labour Market ◽  
Capital Intensity ◽  
Service Industries ◽  
Employment Protection ◽  
Skilled Workers ◽  
Large Country ◽  
Down Low ◽  
Highly Skilled ◽  
Protection Legislation ◽  
The Impact

What is the impact of labour market regulations as measured by the OECD indicator of employment protection legislation (EPL) on capital and skill composition? Precisely, this study investigates the effects of changes in EPL on changes in four types of capital and three components of labour skill. They include construction, non-ICT, ICT, and R&D capital components on the one hand, and low-, medium-, and highly-skilled labour on the other. Our analysis is grounded on a large country–industry panel dataset of fourteen OECD countries, and eighteen manufacturing and market service industries, from 1988 to 2007. It shows that strengthening EPL lowers ICT capital and, even more severely, R&D capital relative to non-ICT and construction capital; it also brings down low-skilled relative to highly-skilled workers’ employment. These results suggest that structural reforms for more labour flexibility could have a favourable impact on firms’ R&D investment and hiring of low-skilled workers.

scholarly journals Complementarities between Labour Market Institutions and their Causal Impact on Youth Labour Market Outcomes

2020 ◽  
Vol 20 (3) ◽  
Author(s):  
Niall O’Higgins ◽  
Giovanni Pica
Keyword(s):  
Labour Market ◽  
Employment Protection ◽  
Employment Protection Legislation ◽  
Policy Reforms ◽  
Market Institutions ◽  
Market Outcomes ◽  
Labour Market Institutions ◽  
Protection Legislation ◽  
Labour Market Outcomes ◽  
The Impact

AbstractWe analyse theoretically and empirically the effects on young people’s labour market outcomes of two specific labour market institutions and their interaction: employment protection legislation and active labour market policy. The paper examines recent policy reforms in Italy focussing on the impact of the 2012 Fornero reforms of employment protection legislation as well as the initial impact of the EU-wide Youth Guarantee scheme introduced in Italy in March 2014. The paper then examines how these two policy reforms interacted. The analysis first confirms the finding that the Fornero reform increased permanent hires particularly amongst the very youngest workers; it then goes on to find that the YG was indeed successful in increasing the hires of young people, although this operated through a statistically significant increase in female hires on temporary contracts. Third, it finds some evidence of a dampening effect of the YG on EPL reforms as predicted by theory.

Employment protection and gender gap

2019 ◽  
Vol 41 (1) ◽  
pp. 1-16 ◽  
Author(s):  
Patrizia Ordine ◽  
Giuseppe Rose ◽  
Gessica Vella
Keyword(s):  
Gender Gap ◽  
Wage Gap ◽  
Employment Protection ◽  
Large Firms ◽  
Labor Market Reform ◽  
Content Type ◽  
Firing Costs ◽  
Protection Legislation ◽  
And Gender ◽  
The Impact

Purpose The purpose of this paper is to evaluate the impact of more stringent Employment Protection Legislation on employment outflows and wages of women compared to those of men. Design/methodology/approach The authors exploit the Italian labor market reform of 1990 that raised firing costs for firms with less than 15 employees leaving unchanged existing rules for larger firms. The authors setup a natural experiment using this firm size threshold to examine if an increase of severance pay in small relative to large firms has a different impact on labor flows and earnings by gender. Using administrative linked employer–employee data, the authors find a significant reduced flow out of employment of women with respect to men in small relative to large firms after 1990. Findings The results also indicate a reduction of the gender wage gap after the reform of about 1.5 percent. These findings are statistically significant for women in fertility age and disappear if we consider older women. Originality/value The findings are consistent with the idea that employment protection may help in reducing gender disparities.

Firms’ Adjustments to Employment Protection Legislation: Evidence from South Korea

ILR Review ◽  
2017 ◽  
Vol 71 (3) ◽  
pp. 733-759 ◽  
Author(s):  
Jisun Baek ◽  
WooRam Park
Keyword(s):  
South Korea ◽  
Negative Impact ◽  
Employment Protection ◽  
Employment Protection Legislation ◽  
Temporary Workers ◽  
Firm Level ◽  
Employment Level ◽  
Temporary Contracts ◽  
Protection Legislation ◽  
The Impact

The authors examine the impact of employment protection legislation on firm-level outcomes such as employment and profitability in South Korea. The 2007 Act on the Protection of Temporary Workers restricted the use of specific types of temporary contracts to a period of two years. Exploiting the fact that the impact of the reforms was greater for establishments that intensively used the affected temporary workers, the authors apply a difference-in-differences framework. Their results show that businesses responded to the Act by reducing the use of temporary contracts protected by the reforms and partially substituting them with permanent and other unprotected temporary contracts. As a result, the reform decreased overall employment level of establishments. Furthermore, the authors find that the newly introduced regulations had a limited negative impact on firms’ profitability. Evidence suggests that establishments also improved their capital intensity and their labor productivity in response to the labor reform.

scholarly journals Optimal Spatial Allocation of Labour Force and Employment Protection Legislation (EPL)

2019 ◽  
Vol 45 (45) ◽  
pp. 45-58
Author(s):  
Carlos Coca Gamito ◽  
Georgios Baltos
Keyword(s):  
Labour Force ◽  
Employment Protection ◽  
Employment Protection Legislation ◽  
Common Currency ◽  
Optimal Point ◽  
Euro Zone ◽  
Currency Area ◽  
Asymmetric Shocks ◽  
Protection Legislation ◽  
The Impact

AbstractThe paper introduces a model of how workers rationally decide to which country within an area of monetary and economic integration they will move for the purposes of living and working. Since Mundell accomplished his pivotal respective analyses, the Optimal Currency Area (OCA) literature has highlighted the importance of the reallocation of the labour force within common currency areas in order to cushion asymmetric shocks. However, several studies have put into question whether such a mobility may be considered adequately effective and efficient within the Euro Zone and, hence, political solutions have been urgently requested. This paper, using the concept of employment protection legislation (EPL), looks at the impact of the different flexibility degrees applied among national labour markets on the international labour movements within the Euro Zone, and it then proposes a reform of such in terms of the degrees of flexibility that could achieve the optimal point.

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