The effect of labour regulation on recruitment

Stanley Siebert

While labour regulation such as dismissals protection reduces unemployment risks for workers with jobs, there have been concerns that it may lead to stricter hiring standards, which screen out less qualified workers and so reduce their job opportunities.

This report tracks hiring standards over the period 1975-94, using personnel record data from six plants in the UK, Belgium, the Netherlands and Italy. The study shows that plants in these four countries behave in a surprisingly similar way, despite differences in their national regulatory regimes.

It concludes that labour regulation might not have adverse effects for unqualified workers, though further research is needed.