Working Paper No. 356: Employment Protection and Productivity

Abstract

The design of Employment Protection Legislation (EPL) is a key factor in determining the functioning and flexibility of the labour market. In the wake of the pandemic and the rapid transformation of economies due to i.e., digitalisation, it will be more important than ever to remove impediments on labour and product markets. Multifactor productivity growth (such as work organisation, technical achievements etc.) has slowed down markedly in many countries after the financial crisis. International studies show that the design of EPL is important for productivity growth.