Does Employment Protection Raise Stress? A Cross-Country and Cross-Province Analysis

This paper investigates the effects of employment protection legislation (EPL) on workers’ stress and well-being. EPL increases job security, but it may also have adverse effects on workers, even in partial equilibrium: costly separations may induce firms to exert pressure on workers or raise the intensity of monitoring. Using several individual surveys, we obtain positive and significant effects of EPL on stress in high-turnover sectors relative to low-turnover sectors, with causal interpretation. As to the net effect of EPL, it raises workers’ stress in high-turnover sectors while it generally reduces it in lower-turnover sectors.