Does Job Security Hamper Employment Prospects?

36 Pages Posted: 11 Jan 2021

See all articles by Carl Magnus Bjuggren

Carl Magnus Bjuggren

Research Institute of Industrial Economics (IFN)

Per Skedinger

Research Institute of Industrial Economics (IFN); Linnaeus University - School of Business and Economics

Date Written: December 6, 2018

Abstract

We investigate the effect of employment protection legislation (EPL) on the propensity to hire workers from unemployment and active labor market programs (ALMPs), utilizing a reform that decreased dismissal costs for small firms only. Using administrative data from Sweden, we find that less stringent EPL increased the share of workers hired from unemployment and some ALMPs. Our results suggest that there was less screening of new hires after the reform, and that liberalization of EPL mitigates the stigma associated with unemployment and participation in ALMPs.

Keywords: Employment Protection, Active Labor Market Programs, Unemployment

JEL Classification: J60, J64, K31, H80

Suggested Citation

Bjuggren, Carl Magnus and Skedinger, Per, Does Job Security Hamper Employment Prospects? (December 6, 2018). IFN Working Paper No. 1255, Available at SSRN: https://ssrn.com/abstract=3725410 or http://dx.doi.org/10.2139/ssrn.3725410

Carl Magnus Bjuggren

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Per Skedinger (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

HOME PAGE: http://www.ifn.se/PerS

Linnaeus University - School of Business and Economics ( email )

VÄXJÖ, SE-351 95
Sweden

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