Industrial actions and firing regimes: How deregulating worker “Exit” reshapes worker “Voice”

Using data on more than 13000 European establishments over the 2009–2013 period, we analyze the relationship between discharge regulation and industrial actions. We empirically answer the question as whether stricter dismissal laws make EU establishments experience more frequent and intense industrial actions (work-to-rule, strikes and occupation). We find that a change from employment at-will to a regime with very strict dismissal constraints is associated with an increase in the likelihood of observing an industrial action at the establishment-level ranging between 10.1 and 11.8 percentage points, and that this effect reduces to around 6.5 percentage points when only company-specific industrial actions are considered. A correlation between discharge constraints and industrial actions is found also in a difference-in-differences analysis, where we explore quasi-experimental variations in national dismissal regulations. Although we are not able to establish causality, our findings are suggestive, as they document the possible association between layoff deregulation and the decline of union activism in Europe.