Employment protection and job insecurity

Government regulations are frequently seen as causes of poor economic performance. The goal of this study is to evaluate this claim focusing on one class of regulations, employment protection legislation, and their impact on labor market performance across advanced economies. Even though little is known about the causal effects of employment protection, there is a widely shared consensus that in particular young people suffer from their consequences. Focusing on the youth labor market effects of employment protection should therefore be a generous test for their alleged costs. The empirical analysis draws on two cross-national data sources, uses different estimation strategies and performs a number of robustness checks. The results indicate that there are no robust effects of job security provisions on youth unemployment or employment, neither in the cross-section nor over time. Deregulating temporary employment contracts has brought neither employment gains nor unemployment reductions, but increased labor market insecurity among young people