Employment protection under fire: Labour market deregulation and employment in the European Union

Heyes, Jason; Lewis, Paul

doi:10.1177/0143831x13491842

Cited by 42 publications

(41 citation statements)

References 24 publications

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“…As shown in Figure , EU countries with relatively strong employment protections, for example Germany, tended to experience less severe job losses than those with weaker protections (e.g. the UK) during the early stages of the crisis (for a fuller discussion see Heyes and Lewis, ). It is likely that constraints on dismissals served to stem job losses in the initial period and encouraged employers to look for internal means of reducing labour costs.…”

Section: The Impact Of Epl Before and During The Crisismentioning

confidence: 99%

Relied upon for the heavy lifting: can employment protection legislation reforms lead the EU out of the jobs crisis?

Heyes

Lewis

2015

Industrial Relations Journal

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Section: The Impact Of Epl Before and During The Crisismentioning

confidence: 99%

Relied upon for the heavy lifting: can employment protection legislation reforms lead the EU out of the jobs crisis?

Heyes

Lewis

2015

Industrial Relations Journal

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“…Stricter EPL has been shown to prevent job losses in the initial stages of the economic crisis (Heyesm & Lewis, 2014). In addition, countries that maintained relatively strong employment protection experienced fewer labour-market disruptions (Heyes, 2011).…”

Section: The Matching Process: Power Resources and Institutional Buffmentioning

confidence: 99%

The triple bind of single-parent families

2018

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“…They claim that weakening the restrictions on the labour markets reduces the dismissing costs and encourages the employers to hire more workers (Heyes and Lewis, 2013).…”

Section: Introductionmentioning

confidence: 99%

“…2 Heyes and Lewis (2013) argue that the suggestion of weakening the employment protections is not a new debate among the policy markers. Starting for 1980s the IMF and OECD have suggested that the solution to jobs growth lay in relaxing the rules in the labour markets.…”

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confidence: 99%

“…By measuring the flexibility of labour markets with employment protection levels, I study whether government spending shocks are able to stimulate economic growth more in the markets with weaker employment protections than the ones with stricter regulations. As argued in Heyes and Lewis (2013), lowering employment protections are proposed by European policy makers as a remedy to high levels of unemployment and weak economic growth. It is implied that weaker employment protections will decrease the wages of the employees, increases hiring activity, improves flows in the market, which leads to lower unemployment.…”

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Fiscal Stimulus and Labor Market Flexibility

Topal

2014

SSRN Journal

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The current global economic and financial crisis has drawn the attention of the academic and policy circle to the role and efficiency of fiscal policy and brought it to the center of the debate. As nominal interest rates reached the zero lower bound and the traditional monetary transmission mechanism failed to deal with the demand contraction, fiscal stimulus packages have been suggested as a better tool to boost economies and encounter the remedies of the experienced downturn. Thus, the large-scale fiscal stimulus packages have been implemented around the globe. A closer look at the composition of these packages suggests that the advanced economies strongly focused on labour market measures to cushion the fall in economic output and employment by following the policy advices on necessity of labour market deregulation.Despite of the ongoing debate on the efficiency of fiscal policy implications and labour market reforms, there is no clear consensus about their effectiveness. None of the existing studies has investigated on this issue so far and focused on both the ability of government expenditure shocks to boost output and reduce unemployment and its effectiveness on different labour market institutions. To fill the gap, this paper contributes to the literature by investigating whether fiscal stimulus impact differs for flexible and rigid labour markets. This question is crucial to be answered in order to understand the role of different labour market structures in determining the success of fiscal stimulus. By proxying the flexibility of labour markets with employment protection legislation indicator of OECD, I study whether government spending shocks are able to stimulate economic growth more in the markets with weaker employment protections than the ones with stricter regulations and additionally the impact of fiscal stimulus on unemployment.My empirical results indicate significant differences between rigid and flexible labour markets regarding the impact of the fiscal stimulus on output and unemployment. While the impulse response of real GDP to a government spending shock is positive and more effective in flexible labour markets, it has less impact in the rigid ones. The results show that as the labour markets get more flexible, the impact on the output gets more persistent. It is also found that fiscal stimulus leads to higher overall unemployment in highly regulated countries. This finding confirms the evidence from the existing literature implying that rigid labour market structure is associated with low job creation rate for the unemployed individuals and increasing labour market flexibility has a significant negative effect on unemployment rate. As labour markets get flexible, government expenditure shocks trigger a stronger increase in the new job creation rate, which leads to reduction in the overall unemployment.My findings emphasize that fiscal stimulus may not be able to help rigid labour markets in boosting the economic growth and reducing the unemployment rate. As high employment protections i...

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Employment protection under fire: Labour market deregulation and employment in the European Union

Cited by 42 publications

References 24 publications

Relied upon for the heavy lifting: can employment protection legislation reforms lead the EU out of the jobs crisis?

Relied upon for the heavy lifting: can employment protection legislation reforms lead the EU out of the jobs crisis?

The triple bind of single-parent families

Fiscal Stimulus and Labor Market Flexibility

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