Full Citation
Title: The Consequences of Employment Protection Legislation for the Youth Labour Market
Citation Type: Working Paper
Publication Year: 2011
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Abstract: Understanding the causes of unemployment and job insecurity among young people remains a central concern for social scientists and policy makers. This study focuses on one potential institutional cause of high youth unemployment, employment protection legislation (EPL). While many are skeptical of a link between EPL and high aggregate unemployment rates, a consensus has emerged linking EPL tohigh youth unemployment in particular. The review of theoretical and empirical research conducted here challenges this consensus. Search and matching theoretic explanations have difficulty making unambiguous predictions about the effects of EPL on youth unemployment and empirical research has undertaken little effort to uncover its causal effects. The empirical analysis tests for the existence of aggregate employment effects of EPL across youth labour markets using aggregate data from affluentOECD countries (19852007) and individual data from labour force surveys for 15 Western European countries and the U.S. (19922007). It conducts conventional regression analyses and also implements a Difference-in-Difference design. Neither conventional nor Difference-in-Difference analyses yield any robust evidence whatsoever linking either dimension of EPL to inferior youth labour marketperformance, for any of the education groups or institutional conditions tested. Altogether, this studyrejects the view that strict EPL is or has been the cause of high youth unemployment rates or low youth employment rates, at least for the sample of countries tested here.
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Authors: Noelke, Clemens
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Publication Number: 144, 2011
Institution: Mannheimer Zentrum fopche Sozialforschung
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Data Collections: IPUMS CPS
Topics: Labor Force and Occupational Structure, Other
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