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Nordic Economic Policy Review

Labour Market Consequences of the Economic Crisis

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The Nordic Economic Policy Review is published by the Nordic Council of Ministers and addresses policy issues in a way that is useful for informed non-specialists as well as for professional economists. All articles are commissioned from leading professional economists and are subject to peer review prior to publication. The Nordic Economic Policy Review is published twice a year. The journal is distributed free of charge to members of the Nordic economic associations. The easiest way of subscribing to the NEPR is therefore to become a member of one of these associations, i.e., Denmark: Nationaløkonomisk Forening Finland: Taloustieteellinen Yhdistys Norway: Samfunnsøkonomene Sweden: Nationalekonomiska Föreningen For institutional subscriptions, please contact [email protected] Content: Introduction - Lars Calmfors and Bertil Holmlund Youth unemployment in Europe and the United States: David N.F. Bell and David G. Blanchflower Comment by Oskar Nordström Skans Employment consequences of employment protection legislation - Per Skedinger Comment by Assar Lindbeck Business cycle contingent unemployment insurance - Torben M. Andersen and Michael Svarer Comment by Erik Höglin Is short-time work a good method to keep unemployment down? - Pierre Cahuc and Stéphane Carcillo Comment by Ann-Sofie Kolm What active labor market policy works in a recession? - Anders Forslund, Peter Fredriksson and Johan Vikström Comment by Clas Olsson Regular education as a tool of counter-cyclical employment policy - Christopher Pissarides Comment by Björn Öckert

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Employment consequences of employment protection legislation

This article surveys the literature and adds to the evidence on the impact of employment protection legislation on employment. While stringent employment protection contributes to less turnover and job reallocation, the effects on aggregate employment and unemployment over the business cycle are more uncertain. Exploitation of partial reforms and the use of micro data in recent research appear not to have affected results regarding employment and unemployment in any systematic way. Labour market prospects of young people and other marginal groups seem to worsen as a consequence of increased stringency of the legislation. It is debatable whether marginal groups have gained much from the widespread policy strategy to liberalize regulations of temporary employment and leave regulations of regular employment intact. My own analysis suggests that increased stringency of regulations for regular work is associated with a higher incidence of involuntary temporary employment, particularly among the young.

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