Employment protection

Article English OPEN
Scarpetta, Stefano (2014)
  • Publisher: Bonn: Institute for the Study of Labor (IZA)
  • Journal: issue May, pages 1-10
  • Related identifiers: doi: 10.15185/izawol.12
  • Subject: regulations on hirings and firings | K31 | J53 | J23 | regulations on hirings and firings, employment protection legislation (EPL), labor mobility, reallocation of resources, productivity growth | labor mobility | reallocation of resources | employment protection legislation (EPL) | productivity growth
    • jel: jel:J53 | jel:J23 | jel:K31
      ddc: ddc:330

Laws on hiring and firing are intended to protect workers from unfair behavior by employers, to counter imperfections in financial markets that limit workers’ ability to insure themselves against job loss, and to preserve firm-specific human capital. But by imposing costs on firms’ adaptation to changes in demand and technology, employment protection legislation may reduce not only job destruction but also job creation, hindering the efficient allocation of labor and productivity growth.
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