When the paper tiger bites: Evidence of compliance with unenforced regulation among employers in Sweden

Little evidence exists on whether and why organizations comply with regulations that are not monitored or enforced. To address that shortage, this study evaluates the 2007 repeal of an essentially unenforced regulation mandating private and local government employers in Sweden to post their vacancies publicly at the Public Employment Service. Exploiting the fact that central government employers were not affected, difference‐in‐differences analyses identify a substantial negative effect of the repeal on local government employers' vacancy posting propensity – with similar results for the private sector. At odds with deterrence models of regulatory compliance, these findings hint at an important role for organizational factors related to cultures and norms. Heterogeneity analyses indicate that local governments with more law‐abiding organizational culture and stronger social responsibility commitment were more prone to comply with the unenforced regulation. The results thus simultaneously point to an untapped potential and to some possible preconditions for unenforced regulatory strategies.