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Does Employment Protection Reduce the Demand for Unskilled Labor?

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  • Daniel, Kirsten

    (Loyola University)

  • Siebert, W. Stanley

    (University of Birmingham)

Abstract

Perhaps it does. We propose a model in which workers with little education or in the tails of the age distribution – the inexperienced and the old – have more chance of job failure (mismatch). Recruits’ average education should then increase and the standard deviation of starting age decrease when strict employment protection raises hiring and firing costs. We test the model using annual distributions of recruits’ characteristics from a 1975-95 panel of plants in Belgium, the Netherlands, Italy, the UK and the US. The model’s predictions are supported using the Blanchard-Wolfers index of employment protection as well as our alternative index.

Suggested Citation

  • Daniel, Kirsten & Siebert, W. Stanley, 2004. "Does Employment Protection Reduce the Demand for Unskilled Labor?," IZA Discussion Papers 1290, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp1290
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    1. Employment protection effects
      by chris dillow in Stumbling and Mumbling on 2011-01-11 19:43:39

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    Cited by:

    1. Jirjahn, Uwe & Pfeifer, Christian & Tsertsvadze, Georgi, 2006. "Mikroökonomische Beschäftigungseffekte des Hamburger Modells zur Beschäftigungsförderung," IAB-Discussion Paper 200625, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    2. Pekka Ilmakunnas & Seija Ilmakunnas, 2014. "Age segregation and hiring of older employees: low mobility revisited," International Journal of Manpower, Emerald Group Publishing Limited, vol. 35(8), pages 1090-1115, October.
    3. Tong, Yuying & Chen, Feinian & Su, Wenyang, 2019. "Living arrangements and older People's labor force participation in Hong Kong, 1986–2016," Social Science & Medicine, Elsevier, vol. 229(C), pages 50-59.
    4. Selçuk GÜL, 2013. "Institutional Rigidities and Their Effects on Labor Demand in Turkey," Sosyoekonomi Journal, Sosyoekonomi Society, issue 20(20).
    5. Siebert, W. Stanley, 2006. "Labour Market Regulation in the EU-15: Causes and Consequences – A Survey," IZA Discussion Papers 2430, Institute of Labor Economics (IZA).
    6. Heywood, John S. & O'Mahony, Mary & Siebert, W. Stanley & Rincon-Aznar, Ana, 2018. "The Impact of Employment Protection on the Industrial Wage Structure," IZA Discussion Papers 11788, Institute of Labor Economics (IZA).
    7. Fei Peng & Lili Kang, 2013. "Labor Market Institutions and Skill Premiums: An Empirical Analysis on the UK, 1972-2002," Journal of Economic Issues, Taylor & Francis Journals, vol. 47(4), pages 959-982.
    8. Heywood, John S. & Siebert, W. Stanley, 2009. "Understanding the Labour Market for Older Workers: A Survey," IZA Discussion Papers 4033, Institute of Labor Economics (IZA).
    9. Doowon Lee, 2006. "The Korean Economy in Transition: In Search for a New Model," Global Economic Review, Taylor & Francis Journals, vol. 35(2), pages 207-230.
    10. Eugeniusz Kwiatkowski & Przemysław Włodarczyk, 2017. "Employment Protection Legislation and Its Impact on the Elasticity of Employment in OECD Countries," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 3, pages 29-53.
    11. Pekka Ilmakunnas & Seija Ilmakunnas, 2011. "Hiring older employees: Do incentives of early retirement channels matter?," Working Papers 268, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    12. Siebert, W. Stanley & Peng, Fei & Maimaiti, Yasheng, 2011. "HRM Practices and Performance of Family-Run Workplaces: Evidence from the 2004 WERS," IZA Discussion Papers 5899, Institute of Labor Economics (IZA).
    13. Dieckhoff, Martina & Gash, Vanessa & Steiber, Nadia, 2015. "Measuring the effect of institutional change on gender inequality in the labour market," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 39, pages 59-75.
    14. Bjuggren, Carl Magnus & Skedinger, Per, 2018. "Does Job Security Hamper Employment Prospects?," Working Paper Series 1255, Research Institute of Industrial Economics.
    15. Per Skedinger, 2010. "Employment Protection Legislation," Books, Edward Elgar Publishing, number 13686.

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    More about this item

    Keywords

    employment protection; labor demand; unskilled workers; firm panel data;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J83 - Labor and Demographic Economics - - Labor Standards - - - Workers' Rights

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