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This article examines the relationship between labour market flexibility and efficiency and social protection expenditures. Building on the theories of government expenditures and the empirical lit...

Foreign direct investment is one mode of entry into international markets that can provide important benefits to host economies. For this reason, policymakers have sought to apply policies that attract foreign direct investment. Although there is extensive and relevant literature that explores the determinants of foreign direct investment, few studies exist that focus on the relationship between labour market flexibility and foreign direct investment;furthermore, most of these are firm-level studies and use old data. Thus, this study aims to analyze the influence of labour market flexibility on foreign direct investment based on macroeconomic data for a set of 180 countries and a relatively recent period of analysis (2004-2009). Using econometric techniques with panel data, the results show that labour market flexibility enhances the attraction of foreign direct investment. In particular, the rigidity of working hours is the dimension of labour market regulations that most negatively affects the attraction of foreign direct investment. Based on the control variables used, we found that the economic and financial incentives, trade barriers, the growth and the size of the market and the level of human capital are important determinants in the explanation of foreign direct investment patterns. Keywords: Foreign direct investment, Location determinants, Labour market flexibility, Labour regulations.JEL: F21, J80.

The article analyses labour market flexibility in the context of the shadow economy. The main research problem is devoted to the flexibility of the construction labour market in relation to the level of labourers who work in a country's shadow economy. The following hypothesis was adopted: Flexibility of the labour market for the construction industry decreases with an increase in the level of the shadow economy. The MIMIC approach was used to calculate the level of the shadow economy in a group of selected countries, divided into three categories. The first category includes countries with a relatively low level of shadow economy (less than 15% of their GDP). The second group contains a level starting from 15 to 25% of their GDP, while the third group has a shadow economy that exceeds 25% of GDP. The Pearson correlation index was applied in order to measure the coefficient level between market flexibility and the size of the shadow economy. The flexibility of the labour market was calculated as the change of unemployment caused by the change of construction industry output. The research proved that the correlation between market flexibility and the shadow economy is significant. This is due to the fact that the Pearson index reached the level of 0.866, which means that whenever the shadow economy increases, the labour market flexibility of the construction industry decreases. (original abstract)

Labour market flexibility has been a traditional subject of study in labour economics; recent literature has focused on the related concept of fluidity, broadly understood as the mobility of workers and jobs in the labour market. Here, we compute standard measures of fluidity for the Colombian urban labour market, finding evidence of increased fluidity, especially after 2010. Recent developments in equilibrium unemployment models predict, in general settings, a negative relationship between some fluidity measures and the equilibrium rate of unemployment. Recent literature on worker and job flows has identified benign aspects of fluidity, in that fluid labour markets are expected to have shorter average unemployment duration. We find evidence for a positive effect of fluidity on different employment and occupation indices using instrumental variable regression models that exploit variations in labour market outcomes and fluidity measures over time.

Research Question: The aim of this paper is to construct a numerical measure of EPL which takes into consideration the implementation of legislation and employment structure. Motivation: It is recognized in the literature that in countries with a significant share of the shadow economy the labour market flexibility is de facto higher than the original EPL index based on de iure conditions implies. Since the sub-index which refers to the workers with permanent contracts has the largest weight in the EPL index calculation, taking into consideration the share of workers with regular contracts in total employment would give a clearer picture about the real influence of individual sub-indices. Idea: For international comparisons of de iure strictness of the employment protection legislation, we use the latest official OECD data on EPL index and its sub-indices. The OECD data for Serbia shows only the values for EPR, EPC and EPRC sub-indices. After calculation of EPT sub-index and EPL index for Serbia, three adjusted indices are developed in order to capture the effective (i.e., de facto) strictness of the employment protection legislation in different countries. Data: The analysis was based on the latest available official OECD data on the EPL indices (2012 to 2015, depending on a country). For the calculation of missing sub-indices for Serbia, the main source of information was the Labour Law. Data on shadow economy are based on Krstic et al. (2013) and Schneider (2016), while the data regarding employment structure stem from Labour Force Surveys. Tools: Calculation of EPT and EPL indices was conducted in accordance with the official OECD methodology for calculating summary indicators of EPL strictness. The methodology for calculation of adjusted indices is developed on the initial basis of the previous research from Berger et al. (2016), Eamets & Paas (2007a), Boeri & van Ours (2008), Rutkowski & Scarpetta (2005) and Jandric (2014). Findings: The analysis was performed for 26 European countries. Rankings of European countries according to de facto strictness of the employment protection legislation differ significantly from the rankings made upon de iure strictness of the EPL. De facto external numerical flexibility of the labour market in Serbia is higher than when measured by the original unadjusted indices. Contribution: The main contribution of the paper is the development of the method for international comparisons of EPL, which provides a way to distinguish between de facto and de iure rigidity of employment protection legislation.

This paper deals with the role of the labor market in moderating the growth-effect of foreign direct investment (FDI) in developing countries. FDI has developed rapidly and become the main source of economic growth in developing countries. The purpose of this paper is to examine the role of labor market flexibility in mediating the impact of FDI on economic growth in developing countries. Panel threshold regression analysis proposed by Hansen (1999) is employed to assess the hypothesis of the study. Findings/Originality : The results provide the empirical finding of the role labor market in moderating the growth effect of FDI in developed and developing countries and fill this gap by assessing the role of labor market flexibility as an absorptive capacity in FDI-growth link in developing countries.

Informed by autonomist perspectives on precarious work and labour subjectivity, this article discusses the dynamics between autonomy and job precarity. Based on purposive sampling, the qualitative findings, drawn from interviews with precarious workers aged 18–29 years in Hong Kong, reveal tensions among four types of aspirations. First, the desire for achieving freedom and individual ambition in work made the respondents critical of the notion of employment-related stability. Second, a determination to break with mainstream career paths empowered young people to take alternative pathways to new modes of work and life. Third, precarious employment was seen as a stepping stone for realising plans for travel or study. Finally, tolerance of precarity was perceived as a transitional stage in their striving for future stability. However, the findings also show the structured dilemmas experienced by young workers regarding the complex relationship between autonomy and precarity in a neoliberal labour market. Some young workers pursued work–life autonomy, constrained by precarious employment relations, acknowledging and bearing the costs, while some strategically used precarity in individual negotiations with employers to realise their goals. This article analyses young workers’ subjectivity through the lenses of autonomy and age and pushes the boundary of precarity studies beyond an implicit dichotomy between determinism and voluntarism.JEL codes: I38, J38, J62

We discuss the relevance of the internationally adopted methodology for modelling labour market flows and comparing labour market flexibility. This is based on a two-state labour market mod...

This paper critically reviews the growing literature on the relationship between India’s supposedly ‘restrictive’ labour laws and poor performance on a range of industrial and social indicators. I first summarize the main claims of this literature, and the construction of the indices that it uses to measure inter-state differences in labour regulation. I show, on the basis of a detailed textual analysis of the relevant laws, that the original authors made multiple errors in coding the legal provisions, and that later contributors to the literature misinterpreted the resulting indices as measures of labour market flexibility. I then highlight some econometric issues that undermine their findings, and the difficulties involved in replicating their analyses with a ‘corrected’ and updated indicator. In the course of this discussion, I briefly describe some very recent changes in the labour laws. I go on to point out some flaws in recent papers: they inaccurately capture the employment thresholds at which different sections of the law become applicable; they ignore reasons other than labour regulations for why firms choose to stay small; and they ignore other forms of flexible employment while creating a misleading dichotomy between contract workers and ‘permanent’ workers. I conclude by summarizing evidence of growing de facto flexibility in Indian industry and deteriorating labour market outcomes for workers, without any de jure changes in the regulatory framework.

Within the alleged advent of the ‘gap society’ (kakusa shakai) in twenty-first century Japan, an association of migrant workers with disadvantaged, non-regular jobs seemingly reflects dominance of discriminatory discourses against these workers, which takes for granted the production of them as precarious subjects. This chapter seeks to denaturalize and re-politicize such a presumption, particularly focusing on unauthorized migrant workers in Japan. In doing so, it seeks to press forward two interrelated arguments about the practices of producing and contesting precariousness. First, it is argued that immigration controls, which regulate the transnational inflows of workers and define the conditions under which their entry is authorized or denied, help to fashion precarious labour in ways that respond to capital’s demand for greater labour market flexibility through the creation of institutionalized uncertainty. Second, this chapter also argues that unauthorized migrant workers, who may be portrayed as being at the forefront of precariousness due to their extremely uncertain, insecure, and unstable conditions fundamentally attributable to their status of ‘illegality’ in Japan, are not simply powerless victims but rather are political actors who contest and negotiate such conditions even at the most subaltern level.

This article empirically investigates two propositions normally advanced to explain employment stagnation in the organised sector of the Indian labour market namely, rigid labour laws regulating the ‘hiring and firing’ of workers (along with factory closures) and militant trade union activity boosting workers’ bargaining power. It is claimed that labour laws arrest employment creation by making the labour adjustment process difficult. Additionally, it is claimed that workers’ increased bargaining power raises the effective cost of labour, hindering employment creation. This article critically examines both these claims. First, it questions whether labour laws can be held responsible as an explanation for employment stagnation in the organised sector as a whole, since a close reading of the Indian legislation reveals that labour laws apply in less than 35% of aggregate employment in the organised sector in India. Next, it investigates whether employment stagnation in those industry segments where labour laws apply – namely, organised manufacturing – is due to restrictions on ‘hiring and firing’. We find no evidence to support this hypothesis. Finally, it analyses the trend in workers’ bargaining power through various indicators, and finds such power to be unambiguously declining. Thus, the study finds no empirical support for the two conventional arguments put forward to explain employment stagnation in the organised sector of the Indian labour market. JEL codes: J31, J63, J88

Existing study argues that labour market flexibility accompanied by trade liberalisation helped in building complementary relationship between formal and informal sectors in India. However, no direct relation is established between the labour market flexibility and trade liberalisation with respect to inter- and intra-sectoral movement of labour. The present study enquires whether the extent of labour mobility between and within formal–informal sectors affects the formal–informal growth linkages due to the tariff cut on traded goods, as a part of trade liberalisation in India. The findings based on static CGE analysis indicate that in absence of labour market segmentation (i.e. in absence of both wage rigidity and skill specificity) with full mobility of labour, formal sector growth is higher vis-à-vis the growth of those activities under segmented labour market with full mobility of labour. Amongst growing informal sector activities, output growth is lower in absence of segmented labour market with full mobility of labour. Finally, restricted labour mobility leads to largest expansion of formal activities, but further exacerbates the growth of informal activities. The study reveals that improvement in functional income distribution is mixed across households, depending on the degree of labour mobility, which implies labour market adjustment is costly due to structural reforms, that pitches for government intervention.

Motivation: The Central and Eastern European countries suffered from a decrease in professional activity and increases in unemployment, income inequality, and underemployment. In most of the countries in the region, it was decided to increase labour market flexibility, adopting a Western European model of labour market functioning. The effects of deregulation (flexibility increase) for the labour market depend to a great extent on the economic situation.Aim: The paper attempts to answer the question of the degree to which changes in the employment level and structure can be explained by changes in the economic situation. The article verified two hypotheses: ‘the employment level reacts to changes in the economic situation; however, this reaction in the Central and Eastern European countries is more severe than the average reaction in the European Union’ (H1) and ‘changes in the economic situation determines to a very large extent the employment level in the groups experiencing discrimination (women, youngest and oldest people) more than for employees in general’ (H2).Results: In the majority of the examined countries, a statistically significant correlation occurs between changes in GDP and total employment level; but for all analysed countries as a whole, the influence of changes in GDP on the employment level is not greater than the European Union’s average. The data do not indicate discrimination against certain groups (women, young people, people in pre-retirement age), changes in the employment levels of the aforementioned groups are less dependent on the economic situation than the changes in total employment.

The paper is aimed at assessing efficiency of adopted measures of the concept of flexicurity in Sweden and Czech Republic in 2006-2015. It examines hypothesis that the matching process can be made more efficient by increasing the labour market flexibility. The Beveridge curve depicting the relationship between the unemployment and job vacancies is used to demonstrate a change in efficiency of labour market policies. The correlation analysis is used to address possible reasons for weaknesses of active labour market policies. Research findings show a better efficiency of the matching process in a rigid labour market, with the hypothesis being confirmed only for Czech Republic. However, the Czech labour market was fighting against higher imbalances than the Swedish one, throughout the whole period under review, with the most threatened unemployed having been both young and older people.

Overeducation describes the situation whereby workers are located in jobs for which they are deemed overqualified. This paper examines patterns in overeducation between countries using a specifically designed panel data set constructed from the quarterly Labour Force Surveys of 28 EU countries over a 12- to 15-year period. It is not the case that overeducation has been rising rapidly over time in all countries, and where overeducation has grown, the trend has been very gradual. Furthermore, overeducation rates were found to be static or falling in approximately 50% of the 28 EU countries. The evidence points towards convergence in overeducation at a rate of 3.3% per annum. In terms of the determinants of overeducation we find evidence to support policies aimed at improving effective female participation, labour market flexibility and the practical aspects of educational provision as a means of reducing the incidence of overeducation within countries.

According to the OECD, active employment policies include all social expenditure that are directed at improving the chances of finding a job and income generation (except education). Active labour market policies are around to assist in enhancing labour market flexibility at the times of economic changes. Their key components are the so-called activation strategies that act as typical prerequisites of benefitting from unemployment security/support systems in every EU country. The workfare concept lies behind the public work programmes. There are serious professional debates whether public work can primarily be seen as a ’compulsion and work test’ or, rather, as an opportunity of entering the primary labour market. The available efficiency analyses unanimously state that public work forms have the biggest role in testing willingness to work and the obligatory nature is the strongest of all active labour market policies. Research also indicates that public work reintegrates only few people back to the primary labour market and the majority are restrained from seeking a job and other income generating activities. There are several reasons for and against public work and opinions differ. The paper summarises the benefits and drawbacks on the basis of international and Hungarian analyses.