David Young (Directorate General for Economic and Financial Affairs)
(European Economy. Economic Papers. 186. July 2003.
Brussels. 52pp. Tab. Free.)
KC-AI-03-007-EN-C ISBN: 92-894-5834-8 ISSN: 1016-8060
Despite the large volume of economic literature on employment protection legislation (EPL), there remain remarkable disagreements among economists and policy-makers on the subject. Many highlight the risks associated with stringent EPL, both for labour market performance and for productivity growth. Others think that worrying about EPL is largely a waste of time, since the impact is ambiguous according to economic theory and rarely of high significance in cross-country empirical studies.
This paper reviews some of the recent theory and empirical evidence.