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Employment protection legislation and job reallocation across sectors, firms, and workers

In: Handbook on Labour Markets in Transition

Author

Listed:
  • Pierre Cahuc
  • Marco G. Palladino

Abstract

This chapter provides a review of the existing literature on the effects of employment protection legislation (EPL) on job allocation across industries, firms, and workers, and its implications for innovation and economic growth. We analyze empirical studies to assess how EPL influences resource allocation, firm dynamics, and labor market segmentation. The review highlights the heterogeneous effects of EPL on different firms and groups of workers. Additionally, we discuss the channels identified in the structural literature through which EPL-induced job reallocation affects productivity, innovation, and overall growth. While existing evidence demonstrates the significant influence of EPL on all these outcomes, further quantification of these effects remains a research challenge.

Suggested Citation

  • Pierre Cahuc & Marco G. Palladino, 2024. "Employment protection legislation and job reallocation across sectors, firms, and workers," Chapters, in: Stéphane Carcillo & Stefano Scarpetta (ed.), Handbook on Labour Markets in Transition, chapter 11, pages 212-223, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:19758_11
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    File URL: https://www.elgaronline.com/doi/10.4337/9781839106958.00018
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