Working Paper No. 1061

Employment Protection on Labor Productivity

Published: March 16, 2015, revised April 2015 and November 2017Pages: 50Keywords: Employment Protection; Labor Market Regulations; Labor Productivity; Last-in-First-out RulesJEL-codes: J23; J24; J32; J38; K31; M51; K31; D22

Employment Protection on Labor Productivity Carl Magnus Bjuggren


Current theoretical predictions of how employment protection affects firm productivity are ambiguous. In this paper, I study the effect of employment protection rules on labor productivity using Swedish register data. A reform of employment protection rules in 2001 enabled small firms with fewer than eleven employees to exempt two workers from the seniority rules. I treat this reform as a natural experiment. My results indicate that increased labor market flexibility increases labor productivity. This increase is explained by total factor productivity and capital intensity rather than the educational level of workers.

An Agenda for Europe

Institutional Reform for Innovation and Entrepreneurship

Omslag 2017 Institutional Reform for Innovation and Entrepreneurship.jpg

The authors of this book, Niklas Elert, Magnus Henrekson and Mikael Stenkula, advise the economies of the European Union to become more entrepreneurial in promoting innovation and economic growth. The authors propose a reform strategy with respect to several aspects to achieve this goal.

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