Employment protection, technology choice, and worker allocation
"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...
| Main Authors: | , , |
|---|---|
| Institution: | ETUI-European Trade Union Institute |
| Format: | TEXT |
| Language: | English |
| Published: |
Bonn
2010
IZA |
| Subjects: | |
| Online Access: | https://www.labourline.org/KENTIKA-19184884124919020669-employment-protection,-technol.htm |
| _version_ | 1771659897138577411 |
|---|---|
| author | Bartelsman, Eric J. Gautier, Pieter A. de Wind, Joris |
| author_facet | Bartelsman, Eric J. Gautier, Pieter A. de Wind, Joris |
| collection | Library items |
| description | "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 firms 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 reflect both the observed differences across countries in EPL and the observed increase since the mid-1990s in the variance of firm performance associated with the adoption of information and communication technology. The simulations produce a differential response to the arrival of risky technology between low- and high-EPL countries that coincides with the findings 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." |
| format | TEXT |
| geographic | EU countries USA |
| id | 19184884124919020669_d3ceaf46b04d40818e0584ee50918158 |
| institution | ETUI-European Trade Union Institute |
| is_hierarchy_id | 19184884124919020669_d3ceaf46b04d40818e0584ee50918158 |
| is_hierarchy_title | Employment protection, technology choice, and worker allocation |
| language | English |
| physical | 45 p. Digital |
| publishDate | 2010 |
| publisher | Bonn IZA |
| spellingShingle | Bartelsman, Eric J. Gautier, Pieter A. de Wind, Joris comparison employment security information technology innovation labour law statistics Employment protection, technology choice, and worker allocation |
| thumbnail | https://www.labourline.org/Image_prev.jpg?Archive=115763593394 |
| title | Employment protection, technology choice, and worker allocation |
| topic | comparison employment security information technology innovation labour law statistics |
| url | https://www.labourline.org/KENTIKA-19184884124919020669-employment-protection,-technol.htm |