LABOR MARKET REGULATION AND PRODUCTION WORKER HIRING STANDARDS: INTERNATIONAL COMPARISONS

Abstract

The study analyses production worker hiring standards based on time series personnel records drawn from matched plants in the U.S., U.K., Italy, the Netherlands and Belgium. Our hypothesis is that labor market regulation pushes upwards hiring standards for production workers. Labor market regulation is measured both by an employment protection index, and by workforce average tenure as a proxy for insider power. We find that the average tenure variable gives more robust results than the index. Its effect is to increase education standards, but to reduce starting age standards. The expected positive effect of employment protection on hiring standards is found in simple regressions, but is not generally supported by the multivariate analysis once other influences are held constant. However, union density is found to increase hiring standards, and might take over the effect of employment protection as an indicator of overall regulatory pressure. We also find a strong substitutability between recruits’ prior experience and education. This substitutability indicates the power of education to widen job opportunities for inexperienced workers.

Citation

Daniel, K. and Siebert, W.S. (2003), "LABOR MARKET REGULATION AND PRODUCTION WORKER HIRING STANDARDS: INTERNATIONAL COMPARISONS", Advances in Industrial & Labor Relations (Advances in Industrial & Labor Relations, Vol. 12), Emerald Group Publishing Limited, Leeds, pp. 39-71. https://doi.org/10.1016/S0742-6186(03)12003-3