Employment protection, technology choice, and worker allocation

Arbeitspapier

Using a country-industry panel dataset (EUKLEMS) we uncover a robust empirical regularity, namely that high-risk innovative sectors are relatively smaller in countries with strict employment protection legislation (EPL). To understand the mechanism, we develop a two-sector matching model where firms endogenously choose between a safe technology with known productivity and a risky technology with productivity subject to sizeable shocks. Strict EPL makes the risky technology relatively less attractive because it is more costly to shed workers upon receiving a low productivity draw. We calibrate the model using a variety of aggregate, industry and micro-level data sources. We then simulate the model to reflect both the observed differences across countries in EPL and the observed increase since the mid-1990s in the variance of firm performance associated with the adoption of information and communication technology. The simulations produce a differential response to the arrival of risky technology between low- and high-EPL countries that coincides with the findings in the data. The described mechanism can explain a considerable portion of the slowdown in productivity in the EU relative to the US since 1995.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: IZA Discussion Papers ; No. 4895

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Unemployment Insurance; Severance Pay; Plant Closings ; Technological Change: Government Policy
• Thema: Employment protection legislation ; exit costs ; information and communications technology ; heterogeneous productivity ; sectoral allocation ; Arbeitnehmerschutz ; Technologiewahl ; Hochtechnologiesektor ; Risiko ; Mehr-Sektoren-Modell ; Produktivität ; Informationstechnik ; Sektorale Beschäftigungsstruktur ; Allokation ; Vergleich ; EU-Staaten ; USA

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Bartelsman, Eric J. ; Gautier, Pieter A. ; de Wind, Joris
• Ereignis: Veröffentlichung
• (wer): Institute for the Study of Labor (IZA)
• (wo): Bonn
• (wann): 2010

Weitere Informationen

• Handle: http://hdl.handle.net/10419/36844
• Letzte Aktualisierung: 10.03.2025, 11:45 MEZ