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Tuesday, June 13, 2006

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empiricism

Others have also shown that regulations on hiring and firing don't necessarily reduce job creation.

Nice sentiments - but while making it more expensive to sack people could improve the job security of those in work, it may also discourage employers from hiring in the first place. Not damaging job creation? Don't bet on it.

You tell us about study that empirically falsifies the claim that regulations necessarily reduce job creation, and then respond by claiming that regulations will necessarily reduce job creation.

Why?

Snowbird

"Nice sentiments - but while making it more expensive to sack people could improve the job security of those in work, it may also discourage employers from hiring in the first place. Not damaging job creation? Don't bet on it."

Why not? What's to stop an employer hiring on limited term contracts, or using temping agencies (which I believe they do a lot of in the UK)?

Blissex

«while making it more expensive to sack people could improve the job security of those in work, it may also discourage employers from hiring in the first place.»

Well, which one is the greater effect determines the outcome, and the studies I have seen mentioned conclude that neither prevails. In other words, the effect on overall employment is not large either way.

What are the consequences, other than the apparently negligible ones on overall employment, of making redundancies more difficult? probably these:

* Wages are higher, as people with a job have more leverage.

* Less people get made redundant in downturns, and less people get hired in upturns.

* Unemployment shifts from older workers, who are routinely replaced with younger people, if it is cheap to make them redundant, to younger people, as hiring in effect becomes a grant of a trust fund.

In other words I think that younger workers lose X, and older workers win more than X from employers. The gain of older workers is greater than the loss of younger workers because overall workers have more leverage.

So in countries where all workers are easy to fire older workers are in a bad position:

http://EconomistsView.typePad.com/economistsview/2006/05/the_increasing_.html

«For all age groups except those 70 and older, the odds of a temporary spell of poverty doubled in the 1990's... For example, during the 1980's, around 13 percent of Americans in their 40's spent at least one year below the poverty line; in the 1990's, 36 percent of people in their 40's did, according to the analysis.»

http://WWW.Economist.com/images/20060218/CSF956.gif

«Adecco, a large global recruitment agency, says that in France and Germany 50- to 65-year-olds earn 60-70% more, on average, than 25- to 30-year-olds. But in Britain they earn more or less the same»

Note that in the latter statement, the idea that the typical worker's salary declines after 45yo is absurd: what happens is that those 50-65yo who manage to keep their jobs in the UK get ever increasing salaries like in France, but while a lot of them are made redundant in the UK and thus are unemployed or re-employed as cleaners or restockers bringing down the average, most manage to hang on to their jobs in France because they are expensive to make redundant.

Akin

Today's FT has a piece that blows-up the "Scandanavian Social Model."

http://news.ft.com/cms/s/c18430e6-fc0b-11da-b1a1-0000779e2340.html

Christopher

Nice article.
http://www.tempingjobsuk.com>temping work in london

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You tell us about study that empirically falsifies the claim that regulations necessarily reduce job creation, and then respond by claiming that regulations will necessarily reduce job creation.

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