Job Security Legislation and Job Duration: Evidence From the UK

Job security legislation in most countries causes firing costs to rise with job duration. I analyze a 1999 British policy change that lowered from two to one year the tenure necessary for a worker to be able to sue their employer for unfair dismissal. Empirical results show a 29% decrease in the firing hazard for workers with one to two years of tenure relative to workers with higher tenure. The firing hazard for workers with zero to one year of tenure also decreased, which is consistent with better recruitment. Unemployment duration decreased after the policy change, training increased, and wages were unaffected. 

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