Job protection legislation and productivity growth in OECD countries

Bassanini, Andrea; Nunziata, Luca; Venn, Danielle

doi:10.1111/j.1468-0327.2009.00221.x

Cited by 361 publications

(328 citation statements)

References 65 publications

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“…In a related empirical exercise, Bartelsman, Perotti, and Scarpetta (2008) show that the productivity of broadband intensive industries relative to other industries is lower in countries with high EPL. Bassanini, Nunziata and Venn (2009) give evidence that productivity in high turnover industries is relatively low if EPL is strong which is consistent with our …ndings. However, in our model, turnover is endogenous and depends on the choice of technology.…”

Section: Introductionsupporting

confidence: 92%

Employment Protection, Technology Choice, and Worker Allocation

2011

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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 …rms 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 re ‡ect both the observed di¤erences across countries in EPL and the observed increase since the mid-1990s in the variance of …rm performance associated with the adoption of information and communication technology. The simulations produce a di¤erential response to the Acknowledgements: We would like to thank Wouter den Haan, Egbert Jongen, Roland Luttens, Marcel Jansen, participants of CAED, Tokyo and ECB/CEPR Labour Market Workshop, Frankfurt as well as seminar participants at the University of Copenhagen, CPB, the Tinbergen Institute, VU Universiy, University of Maastricht and Nederlandsche Bank for useful comments and suggestions. 1 arrival of risky technology between low-and high-EPL countries that coincides with the …ndings 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.

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Section: Introductionsupporting

confidence: 92%

Employment Protection, Technology Choice, and Worker Allocation

2011

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“…By the same token, given their large turnover, temporary workers may lack the right incentives to improve on their job performance by acquiring better pro-ductive capabilities. Hence, since these skills and OJT are important components of multifactor productivity, this mechanism may have played a relevant role in explaining the unsatisfactory development of TFP growth in Spain and other EU countries with highly segmented labor markets (see Bassanini et al 2009;Dolado et al 2016).…”

Section: Discussionmentioning

confidence: 99%

“…From a European cross-country perspective, the closest studies to ours are Arulampalam et al (2004) and Bassanini et al (2007) who use panel data from the European Community House Panel (waves 1995-2001) to deal with the effects of temporary and permanent contracts on OJT. Their focus is mostly on the extensive margin of OJT since the European Community House Panel has rather limited information on training duration and intensity.…”

Section: Related Literature Reviewmentioning

confidence: 99%

Dual employment protection and (lack of) on-the-job training: PIAAC evidence for Spain and other European countries

Cabrales

Dolado

Mora

2017

SERIEs

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Using micro data from the Programme for the International Assessment of Adult Competencies (PIAAC), we first document how having a temporary contract in Spain is associated to lower levels of on-the-job training (OJT). Next, we find that this OJT gap is positively correlated with gaps in the literacy and numeracy scores achieved by these two types of workers in the PIAAC study. Although we choose Spain as a case study of a dual labor market, we also provide cross-country evidence showing that OJT gaps are lower in those European labor markets where dualism is less entrenched than in those where it is more extended.Keywords Dual labor market · On-the-job training · Cognitive skills · Severance payWe are grateful to the Editor (Nezih Guner), two anonymous referees, Andrea Bassanini, Roman Fossati, Andrea Ichino, Greg Jolivet, Stepan Jurajda and Helene Turon, as well as participants in the CAGE conference on "Education, Human Capital and Labor Market Outcomes" (Venice), ESSLE 2014 (Ammersee) and seminars at Bristol, IMT-Lucca and Padua for useful comments and suggestions that improved the paper. We also wish to thank Nicolas Escribano for excellent research assistance.

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“…These indicators include measures of stringency of employment protection legislation (EPL, from OECD, used e.g. by Bassanini et al 2008) or costs of exiting (from World Bank "Cost of doing business database", used e.g.…”

Section: Exit Costs and Innovationmentioning

confidence: 99%

Searching for the sources of productivity from macro to micro and back

Bartelsman¹

2010

Industrial and Corporate Change

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Research into the sources of productivity growth has taken many disparate routes, from theoretical modeling using an aggregate perspective, to empirical explorations using firm-level data. This paper shows that models relying on the construct of the representative firm do not provide much scope to consider the effects of policy on productivity. The paper provides examples from the literature of the evidence against the representative firm assumption. Once the model is extended to include entry, exit, and heterogeneous firms, policy is able to affect aggregate productivity through many paths, including the efficiency of resource allocation and the margin of selection. As an example, some empirical explorations are provided for the effects of idiosyncratic distortions to firm profitability, the effects of exit costs, and the types of policy that may boost intangible investments.1 I am very indebted to my co-authors from the research projects cited in this paper: Pieter Gautier, John Halitwanger, Enrico Perotti, Stefano Scarpetta, and Joris de Wind, and all participants of the ONS/Eurostat ICT Impacts project.

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Job protection legislation and productivity growth in OECD countries

Cited by 361 publications

References 65 publications

Employment Protection, Technology Choice, and Worker Allocation

Employment Protection, Technology Choice, and Worker Allocation

Dual employment protection and (lack of) on-the-job training: PIAAC evidence for Spain and other European countries

Searching for the sources of productivity from macro to micro and back

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