{
  "title": "Job Protection Deregulation in Good and Bad Times",
  "publication": "IMF Working Papers, December 14, 2017",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2017/12/14/job-protection-deregulation-in-good-and-bad-times-45478",
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  "summary": "This paper explores the short-term employment effect of deregulating job protection for regular workers and how it varies with prevailing business cycle conditions.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Title: Job Protection Deregulation in Good and Bad Times\n- Authors: Romain A Duval, Davide Furceri, João Tovar Jalles\n- Date: December 14, 2017\n- Primary question: How does deregulating job protection for regular workers affect short-term employment, and how does this effect vary with prevailing business cycle conditions?"
    },
    {
      "heading": "Data and Method",
      "content": "- Coverage: major regular job protection reforms covering 26 advanced economies over the past four decades.\n- Unit of analysis: country-sector-level data.\n- Identification strategy: relies on the assumption that stringent dismissal regulations are more binding in sectors characterized by a higher “natural” propensity to regularly adjust their workforce.\n- Econometric approach: local projection method applied to a newly constructed “narrative” dataset of reforms."
    },
    {
      "heading": "Key Findings",
      "content": "- The responses of sectoral employment to large job protection deregulation shocks depend crucially on the state of the economy at the time of reform:\n  - Positive employment responses in an expansion.\n  - Negative employment responses in a recession.\n- Findings are consistent with theoretical predictions about differential effects by business cycle state."
    },
    {
      "heading": "Robustness and Additional Analysis",
      "content": "- Results are robust to a broad range of robustness checks.\n- Instrumental Variable approach: uses political economy drivers of reforms as instruments; conclusions remain robust under this IV strategy."
    },
    {
      "heading": "Policy Implications and Recommendations",
      "content": "- The analysis provides a case for:\n  - Undertaking job protection reform in good times.\n  - Designing job protection reform in ways that enhance its short-term impact when implemented (implicitly to mitigate adverse effects in recessions).\n\n---\n\n Content in this bundle\n\n- Job Protection Deregulation in Good and Bad Times, WP/17/277, December 2017\n  - Job Protection Deregulation in Good and Bad Times, WP/17/277, December 2017 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Job Protection Deregulation in Good and Bad Times, WP/17/277, December 2017 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2017/12/14/job-protection-deregulation-in-good-and-bad-times-45478"
    }
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    "Authors: Romain A Duval, Davide Furceri, João Tovar Jalles",
    "Published: December 14, 2017",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781484333013.001",
    "Title: Job Protection Deregulation in Good and Bad Times",
    "Authors: Romain A Duval, Davide Furceri, João Tovar Jalles",
    "Date: December 14, 2017",
    "Primary question: How does deregulating job protection for regular workers affect short-term employment, and how does this effect vary with prevailing business cycle conditions?",
    "Coverage: major regular job protection reforms covering 26 advanced economies over the past four decades.",
    "Unit of analysis: country-sector-level data.",
    "Identification strategy: relies on the assumption that stringent dismissal regulations are more binding in sectors characterized by a higher “natural” propensity to regularly adjust their workforce.",
    "Econometric approach: local projection method applied to a newly constructed “narrative” dataset of reforms.",
    "The responses of sectoral employment to large job protection deregulation shocks depend crucially on the state of the economy at the time of reform:",
    "Findings are consistent with theoretical predictions about differential effects by business cycle state.",
    "Results are robust to a broad range of robustness checks.",
    "Instrumental Variable approach: uses political economy drivers of reforms as instruments; conclusions remain robust under this IV strategy.",
    "The analysis provides a case for:",
    "**Job Protection Deregulation in Good and Bad Times, WP/17/277, December 2017**"
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