Labour contract regulations and workers' wellbeing: International longitudinal evidence

Labour Contract Regulations and Workers' Wellbeing: International Longitudinal Evidence

The effect of employment protection legislation (EPL) on unemployment and employment levels is still an unresolved issue in the literature. To tackle this issue is the aim of this meta-analysis. Drawing on evidence from 72 studies, I find that EPL has no statistically significant effect on the unemployment level. Based on 42 studies, I find that EPL decreases the employment level. Analysing study heterogeneity reveals that the quality of the identification strategy matters for the results. In particular, studies that account for unobserved heterogeneity across countries or exploit variation at the country level confirm the main findings of the meta-analysis.

Different Paths Towards Flexibility: Deregulated Employment Protection or Temporary Employment - A Study of Cross-National Variance on Employment Protection Legislation and Temporary Employment in 19 OECD Countries

The authors investigate the effects of recent South Korean labor reform, which was designed to protect temporary workers, on the level of temporary, permanent, and overall employment in that country. Because the effects of employment protection legislation (EPL) on employment levels remain theoretically ambiguous, they must be determined by empirical analysis. The impacts of the reform on both temporary and overall employment are negative at first and fade away in two years after the reform, hence taking a U-shape in the post-reform period. The impact of the reform on permanent employment is, however, positive two years after the reform. At least in the short run, an increase in protection for workers comes at a cost of reduced levels of employment.

In dieser Meta-Analyse wird der Effekt der Arbeitsschutzgesetzgebung auf das Niveau von Arbeitslosigkeit und Beschaftigung untersucht. Basierend auf Ergebnissen von 72, respektive 42 empirischen Studien, die das Thema untersuchen, lasst sich kein statistisch signifikanter Effekt auf das Niveau der Arbeits losigkeit und ein leicht negativer Effekt auf die Beschaftigung feststellen. Eine separate Schatzung fur 13 Studien ergibt, dass eine striktere Arbeitsschutzgesetzgebung das Niveau der Arbeitslosigkeit um 0.62–0.64 Prozentpunkte erhoht. Qualitats unterschiede zwischen den Studien, die die Variation zwischen Landern uber die Zeit zur Iden tifikation des Effektes der Arbeitsschutzgesetzgebung ausnutzen, lassen jedoch grundsatzlich an den Ergebnissen dieser Studien zweifeln.

Taking the individual data from the European Social Survey of 2004 and 2010, the authors of this paper investigate how employment type (permanent, temporary or informal employment) affects subjective well-being in respect to employment protection legislation across European countries. Our study outcomes are in line with previous research disclosing the negative impact of being temporally or informally employed on subjective well-being. The additional contribution of this study is the rigorous analysis of how employment protection legislation (EPL) moderates this effect by applying the multilevel modeling approach for 27 countries. In countries with strict EPL temporary and informal workers are significantly less satisfied with their lives than permanent employees. In countries with liberal EPL no significant decreasing effect from temporary or informal employment on people’s subjective well-being was found.

Over the past decade, Korean businesses have experienced significant growth in the proportion of temporary employment. In response, the Korean government has enacted the “Temporary Employment Protection Act” to curb the use of temporary employment. With these legislative changes, Korean employers confront choices about whether to encourage transitions from temporary to permanent employment or to utilise outsourcing/contracting services. The purpose of this study is to explore internal labour markets (ILMs) and investigate why companies are willing to transform temporary employment into permanent employment. Furthermore, in the face of market volatility, we consider how companies are willing to increase the number of temporary workers in order to more easily adjust the numbers and types of human resources, rather than constructing and establishing ILMs within a firm. By investigating the interrelated relationships between ILMs, environmental dynamism, and transitions from temporary to permanent employment status, this study elaborates the features of ILMs in making employment decisions. The statistical results of this study show that structural elements of ILMs facilitate transitions from temporary to permanent employment. Among ILMs, only seniority-based pay plans reduce the number of permanent employees transferred from temporary status when companies experience dynamic changes in their environments. Furthermore, ILMs exerted greater influences over employers’ decisions about transitions from temporary to permanent employment a few years after the enactment of changes in temporary labour laws and regulations. This study shows that the features of an employment system determine companies’ decisions about temporary versus permanent employment. ILMs shape and establish organisational norms and cultural traditions that determine employment structures. Furthermore, institutionalised environments also determine whether employers decide to make transitions from temporary to permanent employment. Future studies should pay attention to the features of employment systems as determinants regarding firms’ human capital.

In recent years the availability of new industry-level data allowed to evaluate the impact of labour market policies more consistently than previous standard cross-country studies. In this paper an industry-level panel is exploited to evaluate the impact of Employment Protection Legislation (EPL) for temporary employment (TE), along with permanent employment (PE), in EU countries. Indeed, the advantage of using industry-level data is manifold. The method exploits both cross-country variation in EPL for PE and TE and variation in the relevance of EPL in different industries deriving from a particular diff-in-diff assumption. Differently from the previous literature we apply this idea of the different binding of EPL only for PE, whereas we implement a different strategy for TE which should imply a more accurate identification of the effect of the use of TE on labour productivity. The theoretical literature has not established a clear prediction on the sign of the effects, existing different convincing reasons for both directions. Thus, the results of the analysis have potentially important policy implications. Our main finding is that the use of temporary contracts has a negative, even if small in magnitude, effect on labour productivity. Furthermore, the analysis confirms that EPL for regular contracts reduce labour productivity growth more in those industries requiring a greater employment reallocation.

Political parties are likely to hold differing views about employment protection legislation (EPL). While pro-welfare parties could support EPL, pro-market parties might focus on labour market deregulation. In this paper, we investigate empirically whether partisan politics, especially the government participation of Social democrats and Christian democrats, matter for EPL in 21 established OECD countries from 1985 to 2019. We show that during the golden age of the welfare state, the level of EPL was much higher where Social and Christian democrats dominated the government than elsewhere. After the golden age and under conditions of high unemployment, these unconditional effects mostly disappeared. Instead, the level of unemployment conditions partisan differences. Christian democrats liberalize EPL for regular employment significantly less than other parties under high levels of unemployment. In contrast, Social democrats defend high levels of EPL for regular and temporary employment when unemployment is low. Against expectations, they even liberalize employment protection for labour market insiders more than other parties at very high levels of unemployment.

This paper studies the effect of product and process innovations on job creation in the Spanish manufacturing sector over the period 1991–2005. We use a change in the employment protection legislation (EPL) in 1997 to study the effect of innovations on permanent and temporary workers before and after that change. We find that (i) product and process innovation created jobs, (ii) before the change in the EPL in 1997 innovations did not affect the number of permanent workers and all the increase in employment was explained by the increase in the number of temporary workers, (iii) after the change in the EPL, innovations increased both the number of temporary and permanent employees, and (iv) while the increase in temporary workers takes place after one year of the innovations, the increase in permanent workers occurs mainly two years after the innovations.

Labor market insecurities have been growing in Europe and previous research has illustrated that unemployment and insecure jobs negatively affect individuals’ well-being and health. Although empirical evidence suggests that these effects vary substantially across different welfare states, we still know little about the moderating role of specific labor market policies. Taking a cross-national comparative perspective, this article investigates how passive and active labor market policies (PLMP, ALMP) as well as employment protection legislation (EPL) shape the experience of unemployment and insecure jobs. We complement micro data of round 1–6 (2002–2012) of the European Social Survey with time-varying macro indicators of PLMP, ALMP, and EPL. The data include about 89,000 individuals nested in 112 country-rounds and 26 countries respectively. We apply three-level random intercept models as well as pooled linear regression models including country fixed effects. The results show that labor market policies are important in shaping the experience of unemployment, but are less relevant for workers in insecure jobs. Specifically, higher unemployment benefit generosity buffers the negative effects of unemployment on well-being but not health. Moreover, we discuss different interpretations for the finding that higher ALMP expenditures are associated with more negative effects of unemployment on well-being and health. With respect to EPL it is found that in countries with high insider protection, deregulating the restrictions on the use of temporary employment increases the negative effects of unemployment on well-being and health.

Extensive use of temporary employment may create a climate of job insecurity among permanent workers in a specific organization. This climate is likely conditional upon the proportion of temporary workers in the organization, and upon the reasons for hiring temporary workers. The percentage of temporary workers may relate to permanent workers’ shared perceptions of job insecurity. Employers’ motives for hiring temporary workers may relate to permanent workers’ perceptions of job insecurity when these motives threaten the position of permanent workers. Conversely, the relationship with a climate of job insecurity is likely negative when the organization hires temporary workers to support permanent workers. Analyses are based on samples of Belgian ( N = 216) and Spanish ( N = 404) permanent workers among 14 and 29 organizations, respectively. The results show a positive relationship between the percentage of temporary workers and a climate of job insecurity among permanent workers. Few motives were predictive for permanent workers’ climate of job insecurity. The findings are interpreted with reference to the specific Belgian and Spanish context.

Research on the effect of employment protection legislation (EPL) on unemployment is extensive. However, results are ambiguous and were not able to show a clear pattern of how EPL is affecting labour market outcomes. Recent research has focussed on the effect of EPL on youth unemployment, linking higher protection to higher unemployment among young labour market entrants compared to their adult peers. Moreover, it is argued that EPL might not have a universal effect on youth unemployment but must be considered in an interplay of institutional factors, including vocational specificity. Based on these findings, this thesis provides a comprehensive assessment of the effects of EPL and vocational specificity on the labour market chances of young people compared to adults. As young people in particular often find their way into the labour market via temporary contracts, it is distinguished between EPL for regular and temporary contracts. A total of 28 OECD countries are examined from 1985 to 2013 using OECD data. In line with previous research, there appear to be no main effects of regular EPL or the vocational specificity on its own on the level of youth unemployment or the youth-to-adult unemployment ratio, but there is a positive effect of temporary EPL on the youth-to-adult ratio. This suggests that especially for young people deregulation of these contracts – contrary to the usual theoretical assumptions – can have a positive effect on their labour market situation. Keywords: Labour market; EPL; unemployment; youth; education.

Total birth rates have fallen dramatically in many European countries during the last 40 years. Job and income instability caused by labor market polarization are significant drivers of declining birth rates because employment certainty and stability are crucial to childbirth planning among young adults. This article investigates the impact of job instability on the fertility intentions of young adults in Europe, focusing on employment protection legislation (EPL) in European countries. I use data from twenty-seven countries that participated in the European Social Survey in 2004 and 2010 to show that job instability measured as temporary employment, informal work, and unemployment decreases fertility intentions among European youth regardless of the EPL in the country. Unemployed young adults tend to plan less for having their first child in the countries with high EPL. Contrary to the hypotheses, multilevel modeling showed that young people in temporary or informal employment in countries with low EPL show decreases in their fertility intentions.

Innovation and Job Creation in a Dual Labor Market: Evidence from Spain