Shortening the tenure clock: the impact of strengthened U.K. job security legislation
"Even in countries with stringent job protection, workers typically only benefit from job security once they have worked at their employer beyond a minimum qualifying (or probationary) period. This paper analyzes how such a probationary period influences firms' behavior and workers' o...
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| Institution: | ETUI-European Trade Union Institute |
| Format: | TEXT |
| Language: | English |
| Published: |
Boston, Ma.
2006
Harvard Business School Press |
| Subjects: | |
| Online Access: | https://www.labourline.org/KENTIKA-19292652124910108349-Shortening-the-tenure-clock-th.htm |
| Summary: | "Even in countries with stringent job protection, workers typically only benefit from job security once they have worked at their employer beyond a minimum qualifying (or probationary) period. This paper analyzes how such a probationary period influences firms' behavior and workers' outcomes. I specifically examine a 1999 British reform that lowered from two years to one year the tenure necessary for a worker to be able to sue their employer for unfair dismissal. I first construct a model based on the assumption that firms learn about match quality over time. The model predicts that, after the reform, the hazard of firing workers between 1 and 2 years tenure decreases relative to the hazard
beyond 2 years in all cases. Moreover, if, to avoid keeping lemons beyond the shorter qualifying period, firms react by recruiting workers more carefully, the hazard between 0 and a few months is predicted to decrease relative to the hazard beyond 2 years; an increase in monitoring has the opposite effect. Cox proportional hazard regressions show that the reform decreased the firing hazard between 0 and 2 years relative to the hazard between 2 and 4 years by about 30%. The calibration of the model reveals an increase in both recruitment and monitoring efforts, hence match quality. Consistent with an increase in match quality, I find that low tenure workers are more likely to receive
training after the reform. Lastly, the reform has no detectable impact on unemployment duration, wages or employment." |
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| Physical Description: | 80 p. Digital |