The New Employment Protection Legislation in the Netherlands

This research shines a new light on the effects of employment protection legislation (EPL) on important macro-economic variables as the unemployment rate, the employment rate and the labour participation rate. According to economic theory and empirical studies, these effects are ambiguous. However, these studies all look at the overall effects of EPL and use cross-sectional analyses. In contrast, in this research the EPL has been broken down into three subgroups to see if the different forms of EPL have different effects and panel data analyses have been executed. These analyses have shown that most of the effects of the subgroups are not significant and that it’s not even possible to determine the sign of the effects with certainty. Nonetheless, the effects of two different forms of EPL on the unemployment rate do seem to differ in size while one of these effects is also statistically significant. At least these results could be useful for policymakers if they both would be proven to be robust. Therefore, future analysis is definitely useful