HAL will be down for maintenance from Friday, June 10 at 4pm through Monday, June 13 at 9am. More information
Skip to Main content Skip to Navigation
Preprints, Working Papers, ...

The Economics of Prozac (Do Employees Really Gain from Employment Protection?)

Abstract : Unlike many other contracts, employment contracts are subject to various external administrative procedures governing separations, ranging from compulsory severance payments and advance notice periods (usually seniority based), to collective layoff procedures (usually depending on the firm's size), and other forms of protections against arbitrary dismissal. These external constraints may raise the wellbeing of workers if everything remains constant, but may fail to do so once other economic channels are accounted for. Here, we explore the effect of such legislation on the firm's attitude towards insiders (i.e. protected workers), notably worker monitoring, working environment, and ultimately what we could term harassment. We show that during downturns, harassing workers in order to induce a quit is a substitute for greater dismissal freedom, and that intense monitoring and depreciated working conditions will occur. Thus, a more protected workforce may loose more than it gains from non-pecuniary pressures exerted by the firm. We test these mechanisms using data from a panel of Canadian individuals (the National Public Health Survey) including details on work-related stress and the consumption of various medications, including anti-depressants. By exploiting cross-province differences in employment protection legislation (EPL), we cannot reject the theoretical hypothesis: we even find positive links between individual employment protection and some dimensions of stress, and weaker but positive links between employment protection, depression and the consumption of various psychotropic drugs. Tenure and firm size information from another dataset is then used to generate further variance in EPL by imputation. This confirms the previous results, as well as falsification exercises: family stress for instance is not correlated with regional EPL, while financial stress is negatively correlated with EPL.
Document type :
Preprints, Working Papers, ...
Complete list of metadata

https://hal-sciencespo.archives-ouvertes.fr/hal-01065471
Contributor : Spire Sciences Po Institutional Repository Connect in order to contact the contributor
Submitted on : Thursday, September 18, 2014 - 10:40:23 AM
Last modification on : Tuesday, March 22, 2022 - 3:34:49 AM
Long-term archiving on: : Friday, December 19, 2014 - 12:30:20 PM

File

wasmer-iza-dp2460.pdf
Explicit agreement for this submission

Identifiers

  • HAL Id : hal-01065471, version 1
  • SCIENCESPO : 2441/9042

Collections

Citation

Etienne Wasmer. The Economics of Prozac (Do Employees Really Gain from Employment Protection?). 2004. ⟨hal-01065471⟩

Share

Metrics

Record views

49

Files downloads

154