1. University of Sheffield, 5/5/16
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Dr Michael Brookes
University of Sheffield, 5/5/16
November 2015

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Employment regulation and productivity: Is there a case for deregulation?
Dr Michael Brookes, Newcastle University
Prof. Philip James, Middlesex University
Prof. Marian Rizov, University of Lincoln

3. Motivation 1979 - Winter of discontent3
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Motivation
Winter of discontent
Election campaign (‘Sick Man of Europe’)
Post 1979 to date – General trend towards reducing employment protection within the UK.

4. Background in UK, prompting calls for more to be done totackle4
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Background
in UK, prompting calls for more to be done totackle
4 countries – UK, Germany, Sweden and France.
UK lower levels of employment protection throughout period considered.
Political consensus within the Eurozone post-crisis towards labour market liberalisation.

5. Hypothesis in UK, prompting calls for more to be done totackle5
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Hypothesis
in UK, prompting calls for more to be done totackle
There is a strong correlation between the level of employment protection within each country and the growth of labour productivity.

6. Data in UK, prompting calls for more to be done totackle6
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Data
in UK, prompting calls for more to be done totackle
AMADEUS Data 1999 – 2008.
8,077 manufacturing firm-year observations.

7. Model in UK, prompting calls for more to be done totackle7
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Model
in UK, prompting calls for more to be done totackle
Cross-country panel regression
Dynamic panel method of moments (GMM)
Dependent variable – Growth in labour productivity
Independent variables – lagged labour productivity, change in capital-labour ratio, total factor productivity, firm age, firm size, cost per employee, industry characteristics, EPL indicators.

8. Results in UK, prompting calls for more to be done totackle 8
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Results
in UK, prompting calls for more to be done totackle

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Conclusions
No real evidence to support a simple negative correlation between employment protection and labour productivity.
Relationship between employment regulation in general, and employment protection specifically, and labour productivity is considerably more complex.
Further research on how these institutional factors impact upon employer and worker behaviour as well as their mediating processes.