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Last In, First Out?: Estimating the Effect of Seniority Rules in Sweden
Stockholm University, Faculty of Social Sciences, Institute for International Economic Studies.
Stockholm University, Faculty of Social Sciences, Department of Economics.
2010 (English)In: Labour Economics, ISSN 0927-5371, E-ISSN 1879-1034, Vol. 17, no 6, 987-997 p.Article in journal (Refereed) Published
Abstract [en]

In this paper we investigate whether a relaxation in seniority rules (the “last-in-first-out” principle) had any effect on firms' employment behaviour. Seniority rules exist in several countries, but consequences of seniority rules on firms' employment behaviour have not been examined previously. The “last-in-first-out” principle in Sweden was reformed in January 2001 such that employers with ten or fewer employees were allowed to exempt two workers from the seniority rule. Using an employer–employee unbalanced panel data for the period 1996–2005, we find that both hires and separations increased in small firms relative to large firms by 5%. This also implies that there were no effects on firms' net employment. Our results show that firms reacted to changes in the seniority rules, but we argue that the effects are not overwhelmingly large.

Place, publisher, year, edition, pages
Elsevier BV , 2010. Vol. 17, no 6, 987-997 p.
Keyword [en]
Employment protection; Employment change; Hires; Separations
National Category
Economics
Identifiers
URN: urn:nbn:se:su:diva-48393DOI: 10.1016/j.labeco.2010.02.007OAI: oai:DiVA.org:su-48393DiVA: diva2:375531
Available from: 2010-12-08 Created: 2010-12-08 Last updated: 2017-12-11Bibliographically approved

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