Employment Protection in Industrialized Countries: the Case for New Indicators

Abstract

The once clear-cut negative correlation between employment stability and the stringency of employment protection appears to have been lost since the mid-1980s. This may be partly due to the obsolescence of existing measures and rankings of stringency. The authors argue that new indicators are needed to capture the complexity of today's institutional frameworks. They illustrate their argument by analysing the role of judicial enforcement of protection - a crucial, yet hitherto neglected determinant of labour market outcomes. Progress in developing new indicators is urgent, in the interest of providing a more solid basis for decisions on reform of employment protection.