Setting It Right: Employment Protection, Labour Reallocation and Productivity

Arbeitspapier

This paper provides a critical review of the recent empirical evidence on the links between regulations affecting the hiring and firing of workers, labour reallocation and productivity growth. It also reviews how workers affected by labour mobility fare and discusses policy options to support them. The upshot is that employment protection has a sizeable effect on labour market flows and these flows, in turn, have significant impacts on productivity growth. At the same time, the evidence also shows that while greater labour market reallocation benefits many workers through higher real wages and better careers, some displaced workers lose out via longer unemployment durations and/or lower real wages in post-displacement jobs. In this context, reforms of employment protection should be considered as part of a comprehensive package that also includes an adequate safety net for the unemployed and effective re-employment services.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Policy Paper ; No. 27

Classification and Topics

• Classification: Wirtschaft ; Labor Demand ; Labor-Management Relations; Industrial Jurisprudence ; Labor Law
• Subject: job and worker flows ; employment protection ; productivity ; Arbeitnehmerschutz ; Arbeitsmobilität ; Produktivität ; Wirtschaftswachstum ; Welt

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Martin, John P. ; Scarpetta, Stefano
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/91754