Employment Protection Legislation and Catching up

Ton Van Schaik (1) , Theo van De Klundert (2)

1 Economics
2 Economics

After WW II productivity growth in Europe and Japan was driven by catching-up with the US. Institutions in Europe were different too and were well suited for economic growth through imitation and adaptation of the technology to local circumstances. Catching up is, however, a self-defeating process. It ends when the technology frontier is attained or when in case of conditional convergence institutions set a limit to the process of catching up. Once this situation is reached, the existing institutions may no longer be appropriate. Regression analysis on a panel of 21 OECD-countries reveals that employment protection legislations (EPL) had a positive impact on productivity growth in the period of rapid convergence in the sixties and seventies. However, from the eighties onwards the total effect of EPL on labour productivity growth was negative.

Mots clés: Social Sciences & Humanities

Domaines: Économie et finance quantitative [q-fin]

Ton Van Schaik, Theo van De Klundert. Employment Protection Legislation and Catching up. Applied Economics, 2011, 45 (08), pp.973-981. ⟨10.1080/00036846.2011.613784⟩. ⟨hal-00747937⟩