Does Lowering Labor Market Standards Create Jobs?

Paper Session

Saturday, Jan. 7, 2017 7:30 PM – 9:30 PM

Hyatt Regency Chicago, Columbian
Hosted By: Labor and Employment Relations Association
  • Chair: William Spriggs, Howard University

The United Kingdom's Employment Regulation - Labour Productivity Conundrum

Michael Brooks
Newcastle University


For almost 40 years within the UK various governments have pursued the line that reducing the extent of employment regulation is an effective means of promoting labour productivity. During the 1979 election campaign what was to become Thatcher's first government sold the line that the UK's labour was the "sick man of Europe" and the poor labour productivity resulted from excessive trade union power plus an over-regulated labour market. Since that date the consistent thrust from all UK governments has been to weaken employment protection as well as reducing the extent of labour market regulation. However the recent paper, Brookes et al 2016, clearly indicates that in comparison to Sweden, France and Germany there are no discernible benefits to the UK in terms of improving labour productivity. Even worse, from comparisons of national data sets becoming available since that paper was written, it appears that the UK's labour productivity has fallen by around 20% against its major EU trading partners in the post-2008 crisis period. Hence the UK is back where it started and after almost 40 years of the drive to reduce labour market regulation it is once again the "sick man of Europe". As a consequence this paper seeks to explore where the UK goes next in terms of a more effective relationship between employment regulation and labour productivity, using the most recent UK data as well as making comparisons with its key trading partners.

Varieties of Labour Market Liberalisation in the EU: Causes, Consequences and Implications for the Future

Jason Heyes
University of Sheffield
Thomas Hastings
University of Sheffield


The economies of the European Union continue to be affected by the aftermath of the financial crisis that began in 2007/8. In many countries unemployment remains above its pre-crisis level and economic growth is weak. The search for a solution to sluggish economic performance and persistently high unemployment has led European governments to implement labour market reforms, many of which have involved a weakening of employment protection legislation (EPL) and looser constraints on the use of temporary employment contracts. The European Commission has largely supported the liberalisation of EU labour markets, while continuing to emphasise the importance of ‘flexicurity’. The paper has two objectives. The first is to examine the content and consequences of the EPL reforms implemented by EU member states. The second objective is to critically evaluate the EU’s wider labour market policy agenda, particularly its continued emphasis on ‘flexicurity’.

This paper has three objectives. The first is to review developments and assess whether they have led to a convergence in the labour market policies of EU member states. The second objective is to examine labour market performance in the wake of the reforms. The final objective is to explain the changes. This will involve a consideration of policy ideas, structural constraints and the interests of national, supranational and international actors. It will also involve an engagement with recent comparative analyses of institutional change and liberalisation, in particular Thelen (2014).

New Work Assessing the Efficacy of the OECD Employment Protection Index: An Overview

Martin Myant
European Trade Union Institute


This is review of a new body of several studies commissioned to evaluate the "structural reforms" recommended for European countries by the European Commission and the European Central Bank in response to the Great Recession. These reforms were a set of supply side recommendations to lower labor costs to lead to the expansion of output and increases in employment. This expands on previous research evaluating labor reforms in Italy and Spain. The 12 country comparison confirms the earlier findings for Italy and Spain, that the reforms are more successful at increasing the casualization of work and increasing in-work poverty than increasing living standards.

Crisis, Adjustment and Resilience in the Greek Labour Market: An Unemployment Decomposition Approach

Vassilis Monastiriotis
London School of Economics and Political Science


The crisis in Greece led to one of the largest economic shocks in European history, with unemployment increasing three-fold within the space of four years and remaining persistently high to date. In this paper we seek to identify how the Greek labour market responded to the fiscal and policy shock of the crisis, comparing also between the adjustment in the country's metropolitan core (Athens) and that in the rest of the country. To do so, we draw on data from the Greek Labour Force Survey and utilise standard micro-econometric techniques to measure the size of the shock exerted on the Greek labour market and the quantitative and other adjustments in response to this shock. We find that in the most dynamic parts of the country adjustment in the extensive margin (unemployment) has been moderated by qualitative adjustments in the economy, concerning mainly a much intensified sorting on the basis of education. Our overall results, however, show that adjustment nationally / outside Athens has been partial and limited, in terms of both labour quality (sorting, selection) and labour quantity (migration); while the role of education and skills for labour market adjustment was much more limited outside the capital. We discuss the implications of these findings for future policy-making in the country, and perhaps in similar economies of the "Eurozone south".
Damon Silvers
JEL Classifications
  • J8 - Labor Standards: National and International